Research On Measurement Of Goodwill And Its Impairment Of Listed Companies

In recent years,with the acceleration of economic structural adjustment in China,intention of listed companies on mergers and acquisitions(M&A)is constantly enhancing,thus M&A becomes a universal phenomenon in China's economic life.Accompanying with popularity of M&A in listed companies,the goodwill scale in financial reports of listed companies is rapidly increasing.Confirmation of high goodwill originally implies that acquirers expect to gain the better earnings in the future,while frequent confirmation of huge goodwill impairment in some listed companies results in huge fluctuation in performance of acquirers,affecting self-confidence of investors.In fact,rapid growth of goodwill increases the risks of goodwill impairment.Confirmation of huge goodwill impairment not only reduces asset quality of listed companies,but also exposes hidden dangers behind M&A of listed companies.Therefore,it is worth deeply studying the measurement of goodwill and its impairment of listed companies.Based on the above-mentioned status,the author reviews research achievements of goodwill valuation and goodwill impairment,sorts out relevant theories about goodwill and its impairment and uses Xiamen 35.com Technology Co.,Ltd.as the case research object.By analyzing value evaluation process of the acquired enterprises in M&A,performance of huge performance promise after M&A,identification degree on intangible assets in initial confirmation of goodwill,and acquirers' alertness on hidden dangers of goodwill impairment,the author firstly analyzes accuracy of goodwill valuation in listed companies.By analyzing profit management motivation and benefit transfer motivation of a company,the author explores reasonability of confirmation motivation in goodwill impairment of listed companies.And the author deduces appropriateness of amount confirmation in goodwill impairment of listed companies on the basis of various factors affecting accuracy of goodwill impairment.The research results show that goodwill valuation and disposal of goodwill impairment have the following problems in the M&A process of listed companies: Firstly,the accuracy of goodwill valuation is affected by multiple factors.Value evaluation process of the acquired enterprises has a series of problems,including subjectivity,inconsistency between setting ofhigh-performance undertaking clauses and actual profitability of acquirers,insufficient intangible asset identification in initial confirmation and insufficient consideration on hidden dangers of acquired enterprises' goodwill impairment,which result in inaccurate goodwill valuation of listed companies with varying degree.Furthermore,confirmation motivation of goodwill impairment in some listed companies is impure.The management of acquirers may ignore the sign of goodwill impairment that the acquired enterprises have been exposed,so as to intervene in time of goodwill impairment and impairment amplitude—surplus earnings management is used to manipulate impact of goodwill impairment on performance.Also,major shareholders can obtain more internal information and control right,thus they have the motivation and conditions to use this advantage for benefit transfer and encroach on benefits of minority shareholders.Then,goodwill impairment test method has some defects in practice and shows complexity and difficult control,so as to affect accuracy of the amount in goodwill impairment.At last,disclosure of listed companies about goodwill valuation and impairment information is insufficient and opaque.By aiming at the above-mentioned problems,the author proposes the following advice:improve subsequent metering method of goodwill;improve occupational judgment capacity of practitioners;reinforce education of investors,improve structure of investors,enhance investor's prognostic capacity for risks of goodwill impairment.The supervision department should notice risks of goodwill impairment and reinforce disclosure supervision strength on goodwill and its impairment information.