22. December 2017
As regards EFRAGs suggestions on how an entity should allocate goodwill, the ASCG is critical of prescribing universally applicable allocation methods.
Therefore, we recommend EFRAG to further analyse the viability of outlining possible appropriate allocation methods, based on different underlying economics of the goodwill. Concerning EFRAGs suggestion of adding information on the composition of goodwill, namely a requirement to disclose a reconciliation of the total goodwill allocated to each CGU, we understand the intention of this proposal but doubt its practical feasibility. The introduction of a mandatory initial qualitative assessment (the ‘step zero’) is also not supported.
Regarding how an entity should determine the recoverable amount, we think that VIU is a better starting point than FVLCD and if only one method were to be allowed or required, we would favour VIU. Nonetheless, VIU should incorporate the use of internal budgets and forecasts and allow the use of a post-tax-rate. Additionally, we are not in favour of making the adjustment EFRAG is suggesting in the form of the goodwill accretion approach.