Study On The Goodwill Impairment Of Companies

In recent years,as the mergers and acquisitions in capital market continue to expand the scale and the rapid growth of book value of listed companies,the impairment of goodwill is more and more serious,large-value goodwill impairment provision seriously affected the net profit of listed companies,resulting in huge losses of some companies.Companies that incur significant impairment losses often pay higher premiums in business combinations and recognize high goodwill in accordance with current accounting standards,exposing a series of issues such as impairment of goodwill over the period,aroused widespread concern.At the same time,judging from the motivation of making goodwill impairment,many enterprises use the imperfection of goodwill impairment criteria to conduct earnings management operations,making it hard for financial reporting users to obtain real and reliable financial information.Goodwill impairment issues still exist a lot of space for research and discussion.Based on this background,I use the case study form based on reading a large amount of literature,aiming to analyze the existing problems in the current goodwill accounting standards implementation process and propose corresponding improvement measures.This paper first sort out the research-related theories to provide a theoretical basis for the thesis.After introducing the case of Yushun acquisition of Yassy Technologies,the impact of goodwill on the company's performance was analyzed from the early and late phases of M&A.For the reason of huge impairment of goodwill,this paper analyzes the initial recognition of business reputation,follow-up measurement and the motivation of earnings management.Then it simulates the implementation effect of the system amortization method and advances the follow-up conclusions.After analysis,this paper believes that high-level premium mergers and acquisitions are the root cause of huge impairment of goodwill in corporate mergers.The evaluation of underlying assets,the identification of identifiable net assets,and the selection of payment methods are all important influencing factors for high-premium mergers and acquisitions.At the subsequent measurement level,the accounting standards for the division of asset groups,the provisions of the impairment test is not specific,the disclosure requirements are not strict,and the regulatory agency pays insufficient attention to the violations of the company,resulting in the use of the goodwill impairment test method as an earnings management tool.Overall,the system amortization method can force companies to prudently confirm merger costs and reduce the possibility of earnings management.The combination of system amortization and impairment testing is more effective than a single impairment test method.In view of the above conclusions,the paper proposes that the initial confirmation of goodwill should be regulated first,and the specific assets should be standardized and the identification criteria for identifiable net assets should be standardized.Secondly,it is proposed to simplify the follow-up measurement of goodwill,explore ways of paralleling amortization and impairment,and strengthen supervision.For the disclosure of goodwill-related information,it is proposed to further refine the information disclosure requirements and change some of the voluntary disclosure requirements to mandatory disclosure requirements.In view of the above conclusions,the paper proposes that the initial confirmation of goodwill should be regulated first,and the specific assets should be standardized and the identification criteria for clear identifiable net assets should be standardized.Secondly,it is proposed to simplify the follow-up measurement of goodwill,explore ways of paralleling amortization and impairment,and strengthen supervision.For the disclosure of goodwill-related information,it is proposed to further refine the information disclosure requirements based on the original information disclosure requirements and change some of the voluntarily disclosed information to mandatory disclosure.Enterprises that fail to make disclosure as required shall be given corresponding penalties.