Full goodwill method
Effekter av ändrade redovisningsprinciper för goodwill
GoodwillFull goodwill methodIASBExposure Draft of Proposed Amendments to IFRS 3 Business Combinations
The main aim of this paper is to consider the possible effects of a transition to a new accounting standard for goodwill. According to IASBs Exposure Draft of Proposed Amendments to IFRS 3 Business Combinations there is an inconsistency in the currently used purchased goodwill method. The full goodwill method is considered to be a superior alternative and is therefore suggested to become the standard from 2007. This paper comprises a quantitative study of the effects on certain key ratios for companies listed on the Stockholm Stock Exchange, arising due to the proposed transition. The period examined is 2004 and 2005. In addition, the pros and cons of the full goodwill method are described as suggested by different stakeholders, i.e. users of the financial statements as well as standard setters. The changes caused by the transition are analyzed in the context of the main accounting principles presented in the IASB Framework. The main findings are that examined key ratios change slightly on average but in certain cases effects are considerable, and that stakeholders? opinions on the contribution of the full goodwill method for a true and fair view diverge.