The Accounting Standards Board (AcSB) is participating in the International Accounting Standards Board’s (IASB) project to investigate possible improvements to IFRS 3 Business Combinations and IAS 36 Impairment of Assets.
Goodwill reflects expected future economic benefits produced by assets acquired in a business combination that are not recognized separately. An entity that holds goodwill is currently required to assess at least annually whether it is impaired.
Some stakeholders have raised the following concerns:
- the impairment of goodwill is not always recognized in a timely fashion;
- the impairment test required for goodwill is costly and complex;
- the disclosures required by IFRS® Standards do not provide enough information to enable investors to understand whether the acquired business is performing as was expected at the time of the acquisition; and
- the separate recognition and measurement of some intangible assets is challenging.
The IASB has decided on its preliminary views for inclusion in the Discussion Paper, Business Combinations—Disclosures, Goodwill and Impairment, which it published in March 2020.