Challenging the accounting for goodwill in the context of a business combination

South African Journal of Economic and Management Sciences

Field Value
Title Challenging the accounting for goodwill in the context of a business combination
Creator Marques, Gary K. Maroun, Warren Garnett, Robert
Subject Accountancy accountability; correspondence analysis; goodwill; neoliberalism; stewardship.
Description Background: The accounting for goodwill under the International Financial Reporting Standard 3 has become generally accepted as a basis for providing useful information to users of financial statements. However, the International Accounting Standards Board has conducted a review of the International Financial Reporting Standard 3, the focus of which is on the revision of the accounting for goodwill.Aim: This article adds to the discussion on the accounting for goodwill by examining its characteristics and considering how these can be used to inform changes to its recognition and measurement.Setting: The principles of neoliberalism and stewardship, widely regarded as key drivers of developments in financial reporting, are used to frame the accounting for goodwill.Method: The research method makes use of correspondence analysis which is a method used to explain complex relationships in a simple diagrammatic manner. In the case of this article, the correspondence analysis is used to show how characteristics of goodwill interact with principles of neoliberalism and stewardship to reveal different perspectives on the accounting for goodwill. The sample selected was 55 chartered accountants, chartered financial analysts and business owners. The chartered accountants are in practice and academia. The reason for this is to give both an academic and practical perspective on the appropriateness of the accounting for goodwill. The reason for the inclusion of the financial analysts and business owners was to enrich the opinions received.Results: The research finds that the accounting for goodwill needs revision.Conclusion: A hybrid accounting model is revealed that proposes that goodwill be recognised as an asset in its own right (neoliberalism) and that it be amortised and the recognition of the effect of inefficient negotiation of the purchase price be recognised in profit or loss (stewardship).
Publisher AOSIS Publishing
Contributor N/A
Date 2020-05-28
Type info:eu-repo/semantics/article info:eu-repo/semantics/publishedVersion — Correspondence Analysis; mixed methods
Format text/html application/epub+zip text/xml application/pdf
Identifier 10.4102/sajems.v23i1.3255
Source South African Journal of Economic and Management Sciences; Vol 23, No 1 (2020); 16 pages 2222-3436 1015-8812
Language eng
Coverage Africa; South Africa 2000 - 2019 R1 - R15; C1 - C10
Rights Copyright (c) 2020 Gary K. Marques, Warren Maroun, Robert Garnett