19. March 2020

IASB Discussion Paper Business Combinations-Disclosures, Goodwill and Impairment

The IASB today published the discussion paper DP/2020/1 Business Combinations-Disclosures, Goodwill and Impairment (further information).

In it, the IASB discusses the following issues, among others:

Waiver of the mandatory annual impairment test

  • Impairment tests are only carried out if there are indications of potential impairment of goodwill (indicator-only approach)
  • Permission to take into account cash flows from expected restructurings and the use of after-tax values or discount rates when calculating value in use
  • Disclosures that can be used to assess management’s rationale for an acquisition
  • Metrics that show whether the performance of the acquisition meets the original expectations of management

In addition, the advantages and disadvantages of a return to scheduled amortization of goodwill are also presented, and it is asked whether there are any new arguments or new findings regarding the best possible subsequent accounting of goodwill.

The topics discussed result from the feedback that the IASB received in the course of the post-implementation review of IFRS 3.

The IASB requests comments on the proposals by September 15, 2020.