Issues on recognition, measurement and impairment of goodwill

Investors and their advisers have to asses how the activities of the acquirer and its acquired business develop following a business combination. Due to a complexity of business activities this is a challenging exercise. Certainly, one of the major challenge concerns the goodwill. Is it an asset? How can it be measured? Which are the implications on fair image of financial position and performances? Therefore, the accounting treatment of goodwill involves applying professional judgment in terms of meeting criteria for its recognition as an intangible asset, but also related to the initial measurement and its impairment. IFRS 3 (Revised) “Business Combinations” will create significant changes in accounting for goodwill, and further more, for business combinations.