Research On Accounting Treatment Of Goodwill From The Perspective Of Earnings Management

As an asset,goodwill has no open trading market,so its accounting treatment has greater flexibility.In addition,the implementation of the new accounting standards has changed the subsequent measurement method of goodwill,which further increases the flexibility of goodwill accounting standards.In recent years,with the upsurge of M & A in China,some listed companies do not hesitate to purchase at a premium in order to pursue hot spots and increase stock prices.The rapid expansion of the goodwill bubble and the flexible increase of accounting standards bring the surplus management space to enterprises.Since 2019,goodwill explosion has appeared frequently in China’s capital market.Based on this background,this paper focuses on the accounting treatment of goodwill from the perspective of earnings management.This paper first analyzes the current situation of goodwill and its impairment in China’s M &A.The results show that the amount of goodwill impairment in China is seriously polarized,and enterprises may indeed use goodwill accounting to implement earnings management.Next,in order to analyze what earnings management space exists in the process of goodwill accounting treatment,this paper tests the earnings management degree of the case company before and after the merger and acquisition by using the model,analyzes the earnings management motivation of the listed company to withdraw a huge amount of goodwill impairment reserves at one time,and from the whole process of goodwill accounting treatment,that is,initial recognition,follow-up measurement And information disclosure.The study finds that in the initial recognition of goodwill,the choice of assets valuation method,the definition of the scope of unconventional intangible assets and the extent of performance commitment may increase the amount of goodwill confirmation,thereby accumulating goodwill bubbles,leaving room for subsequent earnings management.The above problems also exist in the perfection of compensation agreement and the timeliness and accuracy of goodwill information disclosure in information disclosure,which may leave room for enterprises to implement earnings management.Finally,in order to effectively prevent listed companies from using goodwill accounting to implement earnings manipulation,based on the perspective of earnings management,in view of the current situation of the case company,this paper puts forward four suggestions from the rule making and supervision aspects.That is,to purify the amount of goodwill recognition and truly reflect the value of the enterprise;to improve the method of goodwill valuation and enhance the sense of responsibility of the evaluation institutions;to change the follow-up measurement method of goodwill,to use both amortization and impairment,to standardize the information disclosure of goodwill and to strengthen the risk warning.It is hoped that this case can reflect the earnings management space in goodwill accounting treatment,make the cause and process of goodwill impairment transparent,and then help investors improve their ability to identify the risk of goodwill impairment,and enhance the decision usefulness of goodwill information.