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Query: faculty: "FEB" and publication year: "2011"

AuthorE. N. de Gans
TitleGoodwill amortization versus impairment accounting
SupervisorsG. Georgakopoulos, S. van Triest
Year2011
FacultyFaculty of Economics and Business
AbstractThe International Accounting Standards Board (IASB) changed the rules of goodwill accounting from amortization to the impairment method. The objective of these new rules was to improve the quality of financial reporting. By the amortization method the costs of goodwill annually write down, while the impairment method focuses on an impairment test. In this thesis, the aim was to compare both methods. For this purpose the two qualitative characteristics, value relevance and timeliness, which are described by the IASB, where used. The comparison is made based on data of reported companies in Germany. The companies in the thesis have adopted the new method of goodwill accounting. The result of the thesis shows that goodwill impairment is more value relevance than amortization of goodwill. This indicates that goodwill impairment is more relevant for investors, because they use this information for the valuation of the company. The results show also that the information of impairment accounting is timelier than amortization accounting. If we take these results together, the conclusion is that the objectives of the IASB, by changing the standards, are met. The implication of this thesis results, is that the new standards led to qualitative better reporting of goodwill accounting.
Document type scriptie master
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