| In recent years,China’s capital market has developed rapidly.After the country released favorable policies for mergers and acquisitions in 2014,M&A activities have been favored by many entrepreneurs.However,various problems have also arisen in this process,especially since 2018 when issues related to goodwill have frequently appeared in the market.A-share listed companies have reported losses in their performance reports,and impairment of goodwill is an important reason for losses.Therefore,many experts and scholars believe that the current subsequent measurement method for goodwill,namely the impairment test method,has some problems.Subsequent empirical studies have also shown that consolidated goodwill is not necessarily positively correlated with the profitability of enterprises,which contradicts the previous theory that goodwill can enable enterprises to obtain excess returns over a long period of time.To address the above issues,the IASB has held multiple meetings to discuss the advantages and disadvantages of impairment and amortization methods.Since 2018,the number of academic articles focusing on the subsequent measurement of goodwill has been rapidly increasing.The investment and business communities also believe that the current follow-up measurement methods should be optimized.Based on this,there has been a great discussion in the market about which method should be used for the subsequent measurement of goodwill,and the issue of subsequent measurement of goodwill is still on the rise.In this context,it is particularly necessary and urgent to explore a follow-up measurement plan for goodwill that is more suitable for the current economic essence and the current status of goodwill of listed companies in China.Therefore,based on a review of literature and theories related to goodwill and an analysis of the current situation of merger goodwill of pharmaceutical listed companies,this article mainly adopts a case analysis method to select a representative enterprise in the pharmaceutical industry-Humanwell Healthcare Group Co.Ltd.The study focuses on the acquisition of Epic Pharma,LLC and its subsidiary RE Holdco,LLC,and elaborates on the formation and subsequent measurement process of Humanwell Healthcare’s merger goodwill.Simulated the financial data of the case company under different goodwill subsequent measurement methods,and based on this,comprehensively compared and analyzed the advantages and disadvantages of different goodwill subsequent measurement methods from dimensions such as financial statement related items,financial condition,operating results,earnings management inhibition effect,and implementation situation.The following conclusions were drawn:(1)High premium mergers and acquisitions are more likely to cause significant goodwill impairment losses for enterprises;(2)There are many shortcomings in the current goodwill impairment testing method;(3)The parallel method of amortization and impairment is more in line with practical needs.On the basis of the above analysis,this article proposes three targeted suggestions based on the research conclusions:(1)At the level of acquiring enterprises-suggestions on preventing the risk of goodwill impairment: cautious mergers and acquisitions,avoiding excessive goodwill premiums,strengthening the construction of internal control systems,and improving power balance mechanisms;(2)At the regulatory level-suggestions for improving the impairment testing method include compressing the management’s earnings management space,strengthening the supervision of information disclosure,and expanding the scope of information disclosure;(3)At the level of policy makers-suggestions for introducing the parallel method of amortization and impairment:reflected in the determination of amortization period,selection of amortization method,and optimization of impairment testing and provision. |
