Under the existing guidelines goodwill Thinking

Abstract: In 2006, China Accounting Standards for Business Enterprises issued by >> the accounting treatment of goodwill related to revisions made, but only based on goodwill on consolidation convergence of international accounting standards, in theory, there are many inadequacies. Goodwill is the essence of the ability of enterprises to obtain excess returns, it can not be formed in the merger transaction of this brief point in time according to the current state of the environment standards and accounting analysis, goodwill recognized in China should temporarily, but only in the report disclosed in the notes view, and clarifies the concept of goodwill in standardizing accounting practices, and improve the urgent needs of goodwill accounting standards.

Keywords: Goodwill, connotation, metrological confirmation, thinking

Goodwill is owned or controlled enterprises can bring economic benefits but can not over-specific recognition of an intangible resources, and ultimately reflected in the ability of enterprises to obtain excess returns. << Of 2006 issued by the Accounting Standards for Suppliers >> Yu made the relevant provisions of the accounting treatment, but only based on goodwill on consolidation of the international accounting standards convergence, has great limitations. article will be based on the existing goodwill criteria analysis, combined with the goodwill and the current content of the accounting profession controversy, the measurement of goodwill recognized issues were discussed.

First, the accounting treatment of goodwill existing provisions

Accounting Standards for Business Enterprises >> stipulates that non-merger under the same control, the combination costs the acquirer obtains the acquiree's identifiable net assets, the fair value of the difference should be recognized as goodwill in the acquirer individual books and reports listed in holding merger cases, the difference is recognized as goodwill in the consolidated financial statements. generated goodwill is not recognized for goodwill recognized, regardless of whether impairment exists, the enterprise should have at least end of each year, the goodwill and its related asset group or combination of asset groups are tested for impairment, an impairment loss recognized can not be reversed.

As can be seen from the above discussion, guidelines are derived from the provisions of goodwill Goodwill on consolidation developed, and for corporate recognition, measurement problems generated goodwill taken expensing accounting treatment, which is essentially balanced for corporate merger trading accounts established for the purpose, rather than on the nature of goodwill recognized on goodwill is measured. go into the nature of goodwill, plus goodwill on consolidation is accounted for in the formation tell Road, unknown reason, the existing goodwill guidelines clearly can not gain a foothold.

Second, the existence of the current shortcomings of goodwill accounting standards

1 requires a distortion of meaning of goodwill for the content of goodwill, either requires or theorists point of view has reached a basic agreement: Goodwill is the enterprise in the long term and efficient management process evolving over profitability It is a special enterprise intangible resources, can not exist in isolation from the enterprise as a whole, however, the current standards for goodwill accounting requirements, but simply a reference to international accounting practices on the content of international convergence, that is, in combination point is recognized for goodwill in accordance with the merger and reporting. goodwill formation is a lengthy process, it is good for business in the past various favorable factors that precipitate and Integration among enterprises bid when the result of bargaining is recognized as goodwill practice, apparent deviation from "excess profitability" This center, not only does not reflect the essential characteristics of goodwill, but is distorted connotation of goodwill.

2, on a consolidated goodwill recognized irrationality. Combination rarely occurs because the combined company has a high reputation, but in the merger price exceeds the fair value of the net assets acquired phenomenon is extremely common, In this way, we can not say that the acquisition of companies paid the net assets acquired exceeds the fair value of consideration, must be used to pay the acquired company's goodwill. Indeed, in practice there are many corporate mismanagement and even worse, In mergers and acquisitions can also be higher than the fair value of its net assets sold, and the goodwill of these companies did not exist, even if the enterprise has goodwill, the goodwill arising on a business combination can not this brief point in time, Therefore, the purchase price exceeds the share in the fair value of the net assets is recognized as goodwill price, in theory, is wrong.

For example, from August 1989 to March 1990, United Airlines is in the process of being negotiated merger transaction, different buyers from the $ 3.7 billion purchase price rose to $ 6.7 billion, and later fell to $ 5.1 billion or so. In eight months, the company's tangible assets has not changed significantly, if purchased goodwill is equivalent to the difference, then the price of this rose big drop, the value of goodwill can only be attributed to turbulence, but This is not based on facts, because goodwill is a slow process formation, goodwill acquired company in such a short period of eight months, there can be no major changes. existing guidelines on the accounting treatment of goodwill can not be purchased Goodwill reflects the nature and contains many non-goodwill factor, regardless of profitability in the future or in the metrology, were of great uncertainty.

3, the guidelines provide for users of financial statements according to the importance of the principles and practice of full disclosure, the company's key financial information about the case should be fully disclosed, then the long-standing excess profits of an enterprise can not say the situation is important, thus the formation of this The reasons for not reporting the same can not be otherwise, when an M & A business when out of nowhere a huge goodwill, accounting statements, it is difficult to explain the whole story, for example, in January 2006 the Belgian InBev announced to 5.886 billion yuan of net assets acquired only more than 500 million of the entire equity interest in Fujian Sedrin premium rate reached more than 10 times. suddenly came out more than 50 million of goodwill, is the outcome of corporate acquisitions, or a merger synergies across the Group's outlook it? This is simply In the test of InBev stakeholder understanding, so if goodwill is usually not disclosed, is not timely to provide relevant information to users of financial statements, we can not meet the operator correctly reports fiduciary duty requirements, enterprises can not meet with disinterested parties need the right decisions.

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Third, the goodwill Rethinking

1, get rid of purchased goodwill viewpoint specification concept of goodwill. Purchase price and the net assets of the acquired company the difference between the fair market value, and do not represent the nature of goodwill, and that the difference will this all boils down to is extremely goodwill arbitrary and dangerous, it is not conducive to the profitability of the business to make reasonable predictions. Indeed, goodwill as a corporate personality, can not be bought with money. acquired businesses to be acquired businesses over the fair market price to acquire another an enterprise, often for their own development needs, and the excess profitability is just one of the possible reasons and this "merger premium amount" can be considered a strategic merger shareholders can obtain economies of scale to be willing to give up the existing interest, merging parties should be offset against retained earnings, so that will not be included in intangible assets as goodwill leaving investors in the company's future earnings to make unclear or wrong judgments. Accordingly, the goodwill is divided into outsourcing providers generated goodwill and reputation point of view should be abandoned, only the essence of goodwill over profitability,

2, temporarily goodwill recognized only disclosed in the notes in the report. Present, although many companies have the value of goodwill, but also does not have the accounting practice measurement of goodwill recognized conditions, mainly for the following reasons : ① goodwill formative years long, it is not a product of corporate deliberately created, but through efficient organization and management in the nurture generated goodwill occurs during the formation of the cost is difficult to imputation and capitalization. ② only in the enterprise Over several years have made the industry profitable level profits, to realize that the existence of goodwill, therefore difficult to determine the timing of the recognition of goodwill. ③ the value of goodwill on various unfavorable factors change too sensitive, such as the network a rumor posted for the enterprise, this is not the fault of enterprises, but also the level of profitability will be greatly affected, or even discredited. ④ existing standards recognized goodwill, mainly because of the merger to obtain so-called "outsourcing providers reputation "after a specific point in time property transactions, the amount can be reliably measured, it thus confirmed and reported in accordance with the above analysis, since goodwill is not purchased from outside, its measurement and recognition does not arise.

It was also suggested by the company's goodwill assessment agency commissioned a professional assessment of goodwill recognized, although this can overcome the traditional goodwill accounting theory some flaws, but its goodwill is measured based on a series of assumptions, based on As industry average profit statistics, abnormal returns estimated future earnings projections, too subjective factors, the lack of reliability. Meanwhile, China's accounting intermediary market is still not complete, commissioned by the parties to utilize a complex network of relationships, strong human touch, according to their own interests to communicate in private scandals occur frequently, which makes people to assess the independence and reliability of the assessment report has been questioned.

Goodwill presence is undeniable, Enterprise for many years to obtain excess profits can not say the situation is important, therefore the importance of the principle according to the requirements of this excess profitability of the enterprise, that goodwill should be disclosed in the financial statements The guidelines should regulate disclosure of goodwill procedures and methods, as disclosed by the companies themselves strictly in accordance with the conditions of use prescribed measurement methods (such as "excess income capitalization approach", "cut difference method" to determine or adjust the value of goodwill and disclosed in the notes in the report, and explain the causes and effects of the goodwill value of changes in the factors for the users of financial statements provide an important basis for making the right decisions.

3, standard setters should be some question as to treat goodwill present, China has not yet released for the accounting treatment of goodwill specialized standards, and guidelines developed Western countries in the formulation of goodwill far leading the way, for example, in 1982 the United Kingdom Accounting Standards Board issued Accounting goodwill ED30 << >>, the first statement of its position on the issue of goodwill In 1984, the ED30 formed on the basis of a formal announcement of Standard Accounting Practice. seen, our goodwill developed with the international accounting standards, there is still a big gap, as policy makers, the more the more contentious issues for not avoided, but not blindly convergence, otherwise it would not help their accounting theory healthy development. With the growing competition among enterprises, goodwill criteria standardization requirements will become increasingly urgent, therefore, to treat goodwill accounting standard setters should clarify their position bold, clear accounting treatment of goodwill, with the scientific development methods continue to improve, improve, in order to develop in line with China's national conditions goodwill guidelines.


[1] On Deng Yang · goodwill · 2001 · Lixin Accounting Press
[2] · Accounting Standards Board Accounting Standards pipeline - Application Guide · first edition. Lixin Accounting Press, 2006
[3] Geng Mingming, etc. · Business combinations and goodwill accounting treatment of domestic and international comparative Friends · Accounting · 2007.29
[4] Jin Minghua, etc. · Corporate Analysis Reconstruction goodwill evaluation system · Economic Forum · 2004.22

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