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Journal articles on the topic 'Goodwill valuation'
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Rak-Młynarska, Elżbieta, and Aleksandra Skobelska. "Goodwill - valuation dilemmas." ASEJ Scientific Journal of Bielsko-Biala School of Finance and Law 22, no. 4 (January 23, 2019): 28–32. http://dx.doi.org/10.5604/01.3001.0012.9686.
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Valuation of a company is a very complex and challenging task. On one hand it requires the orientation in the existing analytical tools and relies on selection of appropriate valuation methods, and on the other it is quite intuitive with respect to the choice of unquantifiable factors. Re-occurring crisis situations which are triggered by decisions taken upon partial or manipulated information call for a critical review of popular valuation methods and development of new more optimal solutions for company valuation.
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Gadžo, Amra, and Benina Veledar. "Issues Relating to Goodwill Valuation." Ekonomski pregled 72, no. 2 (2021): 249–71. http://dx.doi.org/10.32910/ep.72.2.5.
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According to both theoretical and empirical research results, this paper has the aim to determine, the extent to which the current accounting regulatory framework (IFRS 3 and IAS 36) offers an adequate basis for correct valuation of goodwill. We have researched all the available critical reviews of the accounting treatment of goodwill and the quality of applying accounting regulations onto expression of the goodwill position in BH companies’ practices. The empirical research was conducted on all the companies in the Federation of Bosnia and Herzegovina (FBiH), which recorded goodwill in their balance sheets in the period from 2013 to 2018. The research results have shown a high level of subjectivity in the process of determining the value of goodwill, and great discrepancies in adhering to the accounting regulations in the part of additional valuation and expression of goodwill value in financial reports. This resulted in the fact that the share of companies in FBiH which express decreased values of goodwill is far greater than the share of companies in the European union (EU). The main contribution of this paper is the fact that this is the first comprehensive research on evaluation of goodwill in FBiH companies in comparison to the situation in the EU. Also, it confirms the Agency Theory and shows great subjectivity in evaluation which results in an unjustified expression of a higher operative success in financial reports.
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Cradduck, Lucy, and Clive M. J. Warren. "Goodwill hunting." Property Management 37, no. 5 (October 21, 2019): 597–609. http://dx.doi.org/10.1108/pm-11-2018-0057.
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Purpose The purpose of this paper is to add to the academic discourse by developing a methodology by which a block of land’s goodwill, or lack of goodwill, can be factored into its valuation. Design/methodology/approach The research was undertaken utilising a mixed-methods approach, which involved doctrinal research, together with qualitative and quantitative analysis of the impact of neighbourhood disputes on real property value. The disputes engaged with for exemplar purposes were those of tree disputes resolved by QCAT order. Findings A dispute can adversely affect a property’s goodwill, which can impact both its saleability and value. Research limitations/implications Due to the sensitive nature of the valuation process and the potential negative impact that any identification of a property may have on its value, it was not appropriate to identify any properties specifically or the area in which these are located. Further, as regards the available details of disputes, the authors were only able to engage with disputes for which an order existed. Practical implications The methodology developed can be applied to other real property interests, for example, lots in freehold retirement village complexes or those within other strata title schemes of either residential or commercial use. Social implications As the number of neighbourhood disputes throughout Australia grows, addressing the impact that a dispute has for property value is a concern relevant to all valuers and owners. Originality/value The authors add to the academic discourse by developing a methodology by which a property’s goodwill, or lack of goodwill, can be factored into its valuation.
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Shahwan, Yousef, and Jamal Roudaki. "The impact of IAS 36 on equity values: Empirical evidence from UAE." Corporate Ownership and Control 13, no. 2 (2016): 49–54. http://dx.doi.org/10.22495/cocv13i2p5.
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Amortization requirement of goodwill asset is one of the most controversial issues in financial reporting. This study provides empirical evidence on whether goodwill amortization has significant impact on equity value. It analyses the information content of goodwill amortization in the determination of firm’s market valuation by Emirates Financial Market Listed companies that clearly reported goodwill amortization over the period 2003 to 2012 inclusive. Evidence suggests that there is a statistically significant association between equity market values and goodwill amortization in the determination of firms’ market valuation, concluding that the UAE market perceives goodwill amortization as having information content when valuing firms and the use of standardized amortization requirement may be appropriate.
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Kulil, Vladimír. "Intangible Assets and Goodwill Valuation in the European Union." INTERNATIONAL JOURNAL OF INNOVATION AND ECONOMIC DEVELOPMENT 5, no. 3 (2019): 25–30. http://dx.doi.org/10.18775/ijied.1849-7551-7020.2015.53.2003.
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European valuation standards TEGoVA have conception for valuation of intangible assets and they formed to conform to International valuation standards (IVS) also to reach worldwide consensus in best practices in valuation process. The process of valuation of intangible influences was also surveyed in China, Hong Kong, USA, Canada, Japan, Germany, UK, Poland, Russia and overall in the Europe. Situation in mentioned locations is similar, valuation of intangible influences has not been determined by a concrete list of items and there has not been established concrete clear process. The subject matter of this paper is a proposal for a method of valuation of intangible effects that will impact assets prices. It deals with proposed procedures for valuation of intangible assets. Special effects are in particular name, historical value, design, quality of layout, security aspects, accessibility, and conflict groups of inhabitants in or near the property, location, provenience and other.
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Podhorska, Ivana, Katarina Valaskova, Vojtech Stehel, and Tomas Kliestik. "Possibility of Company Goodwill Valuation: Verification in Slovak and Czech Republic." Management & Marketing. Challenges for the Knowledge Society 14, no. 3 (September 1, 2019): 338–56. http://dx.doi.org/10.2478/mmcks-2019-0024.
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Abstract The paper deals with the possibilities of company goodwill valuation and verification. The value of company goodwill is still an actual issue for the scientific community. Goodwill as an economic phenomenon has attracted the attention of economic experts since the nineteenth century. Nowadays, there are many approaches to goodwill valuation. However, its identification and quantification are still a challenge. The paper aim is to identify significant sources of company goodwill creation and their verification on the sample of 2 European countries with the similar business environment, political stability and regulatory platform - Slovak and Czech companies. The sample for the identification of significant sources of company goodwill creation consists of the financial statements of Slovak companies in 2015. The sample for data verification consists of the financial statements of Slovak and Czech companies in 2016. The paper identifies the determinants of goodwill creation by multiple regression analysis. The paper also verifies the total explanatory power of these determinants by matrixes of changes. Volatility and deviation of the results are captured by descriptive statistical methods. The paper’s results point to a necessity to identify the key determinants of goodwill creation. They bring the construction of an econometric model for company goodwill valuation. It could be used to compute the value of company goodwill of the individual companies in the Slovak economic conditions.
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Johnson-Snyder, Anna J., and Mark J. Kohlbeck. "Valuing the Business of JH Outfitters." Issues in Accounting Education 33, no. 4 (September 1, 2018): 57–75. http://dx.doi.org/10.2308/iace-52263.
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ABSTRACT This case uses a goodwill impairment setting to introduce intermediate and advanced accounting students to business valuation (that is, estimating the fair value of a business unit). Tombstone, Inc. previously acquired JH Outfitter's (JHO) and recorded $2.2 million of goodwill. In prior years, management utilized an outside service to provide fair value estimates of JHO for purposes of the goodwill impairment testing. The business valuation is to be done in-house this year. Three common valuation approaches are discussed in the case to provide students with a background that is sufficient to apply these methods to estimate the fair value of JHO for the goodwill impairment tests. Sufficient, yet conflicting, information is also provided to complete the basic requirements. As such, the case provides students an opportunity to apply the goodwill impairment model (as revised in 2017) where the fair value of a business unit is uncertain.
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Zhang, Ivy Xiying, and Yong Zhang. "Accounting Discretion and Purchase Price Allocation After Acquisitions." Journal of Accounting, Auditing & Finance 32, no. 2 (July 27, 2016): 241–70. http://dx.doi.org/10.1177/0148558x15598693.
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The recent movement in standards setting toward fair-value-based accounting beyond financial assets and liabilities calls for more empirical evidence on fair-value measurement, especially that of intangible assets. This article studies the initial valuation of goodwill and identifiable intangible assets after acquisitions. We find that the allocation of purchase price to goodwill and identifiable intangible assets is related to the economic determinants of the valuation. However, it is also significantly affected by managerial incentives arising from the differential treatments of goodwill and identifiable intangible assets under Statement of Financial Accounting Standards (SFAS) 142. The same managerial discretions are not exhibited in the purchase price allocation prior to SFAS 142, when goodwill and other intangibles are both amortized. These findings suggest that unverifiable fair value measures are associated with the underlying economics but also deviate from the true values in the presence of management reporting incentives. Further analysis suggests that external appraisers constrain managerial discretion in intangible asset valuation to an extent but do not completely eliminate it.
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Marshall, S. Brooks. "Valuation of the Components of Purchased Goodwill." CFA Digest 31, no. 3 (August 2001): 7–8. http://dx.doi.org/10.2469/dig.v31.n3.903.
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Henning, Steven L., Barry L. Lewis, and Wayne H. Shaw. "Valuation of the Components of Purchased Goodwill." Journal of Accounting Research 38, no. 2 (2000): 375. http://dx.doi.org/10.2307/2672938.
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Kulil, Vladimir. "Research on Intagible Assets and Goodwill Valuation." International Journal of Economic Behavior and Organization 5, no. 1 (2017): 20. http://dx.doi.org/10.11648/j.ijebo.20170501.14.
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Hopkins, Patrick E., Richard W. Houston, and Michael F. Peters. "Purchase, Pooling, and Equity Analysts' Valuation Judgments." Accounting Review 75, no. 3 (July 1, 2000): 257–81. http://dx.doi.org/10.2308/accr.2000.75.3.257.
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We provide evidence that analysts' stock-price judgments depend on (1) the method of accounting for a business combination and (2) the number of years that have elapsed since the business combination. Consistent with business-press reports of managers' concerns, analysts' stock-price judgments are lowest when a company applies the purchase method of accounting and ratably amortizes the acquisition premium. The number of years since the business combination affects analysts' price estimates only when the company applies the purchase method and ratably amortizes goodwill—analysts' price estimates are lower when the business-combination transaction is further in the past. However, this joint effect of accounting method and timing is mitigated by the Financial Accounting Standards Board's proposed income-statement format requiring companies to report separate line items for after-tax income before goodwill charges and net-of-tax goodwill charges. When a company uses the purchase method of accounting and writes off the acquisition premium as in-process research and development, analysts' stockprice judgments are not statistically different from their judgments when a company applies pooling-of-interest accounting.
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Cenker, William, and Robert Bloom. "The valuation of an accounting practice and goodwill." Journal of Accounting Education 8, no. 2 (September 1990): 311–19. http://dx.doi.org/10.1016/0748-5751(90)90011-u.
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Labunska, Svitlana V., and Marharyta V. Sobakar. "Recognition of Internally Generated Goodwill as an Identifier of the Valuation of Intangible Assets in the Management Accounting System of Enterprise." Business Inform 6, no. 533 (2022): 64–77. http://dx.doi.org/10.32983/2222-4459-2022-6-64-77.
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The aim of the article is to analyze the existing methods of goodwill valuation and determine the possibility of their application in relation to the identification and recognition of internally generated goodwill as an accounting object and an information basis for effective management of the assets of enterprise. As a result of the analysis of regulatory documents and scientific works of scholars on the exitant valuation methods, the main approaches to the conception of value characteristics were considered, the advantages and disadvantages of their application were allocated, and recommendations for the assessment of internally generated goodwill were provided. As a result of the study, global trends in the accumulation of internally generated goodwill were analyzed, its economic essence and role as an identifier of intangible assets in the management accounting system were considered. The main elements of internally generated goodwill are allocated in accordance with the sources of its formation, which will become the basis for the development of a methodology for its assessment. The accounting and expert directions of assessment of internally generated goodwill are considered, in terms of which the essence, advantages and disadvantages of methods are analyzed, and the possibility of their application to the elements of goodwill is highlighted. It is noted that none of the methods is universal and cannot fully ensure the efficiency of the management of internal goodwill. It is proposed to conduct a comprehensive assessment of internally generated goodwill using various methodologies. As the main ones, methods of additional profit and of profit advantages are proposed, for which the calculation procedure is provided. It is recommended to combine calculation methods with empirical ones based on expert conclusions to increase the objectivity of the input data and the results obtained. Prospects for further research are to develop a detailed system of elements of internal goodwill based on the proposed general approach, methods of their identification and evaluation, and the formation of a system of estimated indicators of such intangible resources.
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Majid, Jamaliah Abdul. "Contemporary Issues Surrounding an Impairment-Only Approach to Acquired Goodwill: A Selected Review." International Business Research 12, no. 4 (March 21, 2019): 90. http://dx.doi.org/10.5539/ibr.v12n4p90.
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This paper presents a selected review of contemporary issues surrounding an impairment-only approach to accounting for acquired goodwill and addresses the question of whether an impairment-only approach has resulted in an improvement in an accounting for goodwill. The review is structured around three main themes: concerned raised by stakeholders regarding an impairment-only approach, causes of the debates on goodwill impairment, and proposed solutions offered by stakeholders. The contribution of this paper to the debate on an impairment-only approach to acquired goodwill is to demonstrate that even though an impairment-only approach has posed implementation, auditing and enforcement challenges, it has also encouraged standard-setters, regulators and firms worldwide to make concerted efforts in bringing in more clarity to the valuation of goodwill and its impairment test. The review ends by offering practical ways forward on an accounting for acquired goodwill.
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Caruso, Giuseppe Davide, Elisa Rita Ferrari, and Vincenzo Pisano. "Earnings management and goodwill impairment." Journal of Intellectual Capital 17, no. 1 (January 11, 2016): 120–47. http://dx.doi.org/10.1108/jic-09-2015-0081.
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Purpose – The purpose of this paper is to understand whether managerial behavior in impairing goodwill arising from M & As has changed after the adoption of IAS/IFRS, searching for evidences of earnings management (EM) practices. Thus, our goal is to provide a response to the following research questions. Are goodwill impairments used by listed firms’ managers to manipulate earnings? If so, what kind of EM practice is mostly used? Design/methodology/approach – In this paper the authors tested the following hypothesis: H1. In the year of the deal’s closure and in the following four years, the management detects impairment of goodwill in difformity with the previous Italian regulations and related accounting practices. Moreover, the authors tried to determine, for each considered firms, potential symptoms of typical DEM practices widely debated in the financial accounting literature (income smoothing, income minimization, income minimization, or big bath accounting). Findings – Our analysis does not prove evidence of certain EM practices, but it highlights very clearly that, after the adoption of IAS/IFRS, managers’ behavior has deeply changed. Moreover, the analysis shows that there is no univocal choice in favor of a specific EM practice and that every firm pursues its own “strategy.” Originality/value – Considering the importance of the topic from both the perspectives of managerial (with regard to M & As valuation processes) and financial accounting (with regard to intangibles valuation fulfilled by applying the impairment test instead of the amortization), this work aims to provide a multi-dimensional contribution to the current debate.
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Podhorska, Ivana, Lubica Gajanova, Jana Kliestikova, and Gheorghe H. Popescu. "Analysis of Internally Generated Goodwill Indicators: A Case Study of the Slovak Republic." Organizacija 52, no. 4 (December 1, 2019): 271–85. http://dx.doi.org/10.2478/orga-2019-0017.
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Abstract Background and purpose: Knowing key indicators of goodwill value can contribute to its effective management and growth of the market value of the enterprise. The purpose of this research is to identify individual goodwill indicators. The paper aim is to obtain potential indicators of enterprise goodwill under the conditions of the Slovak Republic. Design/Methodology/Approach: Paper data included 11,483 financial statements of Slovak enterprises in 2017. The value of residual enterprise income represents the value of goodwill. Input data for the identification of goodwill indicators represented 15 financial-economic variables. Outliers in data were searched and removed through an interquartile range. Multicollinearity among input variables, by the coefficient of determination and variance inflation factor, was also analysed. A statistically significant correlation between goodwill and its potential indicator were tested by the significance test of the Pearson correlation coefficient and correlation matrixes. Results: Research results reveal the existence of a statistically significant correlation between goodwill and 8 input variables, which represent its potential vital indicators. Conclusion: Paper findings bring new possibilities for goodwill management, which may create an essential competitive advantage of a company. For the scientific community, the findings represent sources of potential goodwill indicators which can be used for the creation of the new model of goodwill valuation in future research.
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Lilly, Martha Sadler. "Valuation Of Closely Held Stock." Journal of Applied Business Research (JABR) 6, no. 3 (October 21, 2011): 14. http://dx.doi.org/10.19030/jabr.v6i3.6285.
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Valuation of closely held corporate stock may rest upon several methodologies: restrictive agreements, earning capacity, dividend paying capacity, book or net asset value, goodwill and other intangible assets, as well as minority and controlling interests. Rev. Rul. 59-60 provides guidelines for valuation in the event of few or no market quotations and no restrictive agreements. Various cases have focused on critical factors in the valuation process with little guidance from the courts as to weight or value of such factors.
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Kümpel, Thomas, and René Pollmann. "Bedeutung des Goodwill als Bilanzposition." Der Betriebswirt: Volume 56, Issue 4 56, no. 4 (November 30, 2015): 20–27. http://dx.doi.org/10.3790/dbw.56.4.20.
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Um die eigene unternehmerische Wettbewerbsfähigkeit zu erhalten, werden oft strategische Unternehmenskäufe durchgeführt, die den Zugang zu neuen Produkten und Märkten sowie die Realisierung von Synergie- und Skaleneffekten garantieren sollen. Bei der Übernahme von Unternehmen werden in der Regel Kaufpreise gezahlt, die über dem bewertbaren Vermögen des erworbenen Unternehmens liegen. Der dadurch resultierende derivative Geschäfts- oder Firmenwert (Goodwill) unterliegt seit dem Jahr 2004 einem jährlichen Werthaltigkeitstest. Unabhängig davon, ob Indizien vorliegen, die auf eine Wertminderung schließen lassen, ist ein Impairment-Test jährlich für den derivativen Goodwill durchzuführen. Im Zentrum dieses Werthaltigkeitstests steht das anzuwendende Bewertungsmodell, das an den Bestimmungen des IAS 36 auszurichten ist. Der Geschäfts- oder Firmenwert ist bei der Bilanzierung von Unternehmen von großer Bedeutung. Besonders für große, kapitalmarktorientierte Unternehmen haben die Bewertung und die Folgebewertung des Goodwills große Relevanz. Aufgrund seiner Größenordnung in den Bilanzen der Unternehmen stellt dieser einen determinierenden Faktor sowie ein konzernbilanzpolitisches Instrument dar. Zusätzlich ist die Goodwill-Bewertung im Bereich der International Financial Reporting Standards ständigen und kontinuierlichen Änderungen ausgesetzt, sodass für kapitalmarktorientierte Unternehmen ständig neue Herausforderungen entstehen. To obtain their own entrepreneurial competitiveness, there are often strategic acquisitions necessary, which should guarantee access to new products and markets as well as the realization of synergies and economies of scale. Today’s Mergers & Acquisitions are usually characterized with purchase prices that are much higher than the value of the assessable assets of the acquiree. The thus resulting derivative goodwill is subject since 2004 to an annual impairment test. Regardless of whether there are indications that suggest impairment, an impairment test is carried out annually for the derivative goodwill. At the center of this impairment test is the applicable valuation model, that had to be done due to the provisions of IAS 36. The goodwill is in accounting for businesses and of great importance. Especially for large, publicly traded companies evaluating and subsequent measurement of goodwill has great relevance. Because of its magnitude in the balance sheets of companies, it provides a determinative factor and a balance sheet policy tool. In addition, the regulations regarding the goodwill evaluation are under continuous changes, so for publicly traded companies new challenges will always arise. Keywords: value in use, ifrs3, ias 36, cgu struktur
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Emmanouil, Gkinoglou. "Goodwill and Negative Goodwill: The Real Vision for the Future of a Company–Greek Accounting Standards View." New Challenges in Accounting and Finance 8 (December 2022): 27–36. http://dx.doi.org/10.32038/ncaf.2022.08.03.
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During the last decades, more and more the role of the intangible assets of a company, becomes the main advantage. Especially the goodwill, that the company held from previous years, maybe a significant factor for the establishment of a competitive advantage. But sometimes, this asset, trapped the company and mainly the holders of the company, in a false estimation of high valuation of the company. When a company, undoubtedly change the main purpose of his activity, then the goodwill, must be written-off, or must appear as a negative goodwill, giving to the stakeholders the real vision for the future of the company, and the real value for not false prospects.
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Kulil, Vladimír. "Goodwill and Special Influences Affecting the Value of Real Estate." Advanced Materials Research 1020 (October 2014): 760–64. http://dx.doi.org/10.4028/www.scientific.net/amr.1020.760.
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The subject matter of this thesis is a proposal for a method of valuation of special effects that will impact real estate prices. It deals with proposed procedures for valuation of intangible assets (goodwill), and definitions of such property. Special effects are in particular name, historical value, design, quality of layout, security aspects, accessibility, conflict groups of inhabitants in or near the property, location and other. The value of special effects can be calculated as the difference between market value and the material value of such property without coefficients of merchantability.
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Yi, Ping. "The impact of VAM on goodwill impairment —Based on civil engineering construction industry." E3S Web of Conferences 198 (2020): 03033. http://dx.doi.org/10.1051/e3sconf/202019803033.
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Based on the background of the Ministry of Finance’s concern about the issue of goodwill impairment and the frequent outbreak of goodwill impairment risk, this paper analyzes the difference in the proportion of goodwill impairment during the valuation adjustment mechanism ( VAM ) period and after the VAM period, with a view to providing theoretical and data reference suggestions for the standard-setters and regulators on preventing goodwill impairment risk and improving the relevant regime of VAM, and also providing theoretical support and risk warning for stakeholders in M&A. Combining the normative research method and the empirical research method, this paper takes the merger and acquisition event completed by the A-share listed companies of civil engineering construction industry in 2014-2016 as the initial sample, and studies the difference in the proportion of goodwill impairment during the VAM period and after the VAM period. The conclusion of this paper is: In the merger and acquisition transaction with VAM, the proportion of goodwill impairment of listed companies after the VAM period are greater than that of the VAM period.
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Florin, Dinu, and Loghin Radu-Daniel. "The Impact of Business Intelligence Recognition on Goodwill Valuation." Procedia Economics and Finance 15 (2014): 1779–86. http://dx.doi.org/10.1016/s2212-5671(14)00859-4.
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Qureshi, Maqsood Iqbal. "UK empirical evidence on the valuation relevance of goodwill amortisation." International Journal of Accounting and Finance 3, no. 4 (2012): 367. http://dx.doi.org/10.1504/ijaf.2012.051004.
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Omar, Noraini binti, Norman Mohd-Saleh, Mohd Fairuz Md Salleh, and Kamran Ahmed. "The influence of family and government-controlled firms on goodwill impairment." Journal of Accounting in Emerging Economies 5, no. 4 (November 2, 2015): 479–506. http://dx.doi.org/10.1108/jaee-05-2013-0023.
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Purpose – The purpose of this paper is to examine the effect of ownership structure on the goodwill impairment policy of Malaysian listed firms. In particular, the authors test whether the direction and magnitude of goodwill impairment are related to whether firms are government or family controlled firms. Given the highly concentrated ownership of firms in Malaysia, the authors suggest that the “entrenchment effect” will take precedence over the “alignment effect”, which will be reflected in the accounting policy on goodwill valuation and impairment. Design/methodology/approach – This study utilizes logistic and Tobit regressions to test the prediction, controlling for a range of factors that might affect the goodwill impairment decision. The data were manually collected through 579 firm-year observations from the financial reports of companies listed on the Bursa Malaysia web site for the period 2003-2009. Findings – The authors find that family controlled firms are more likely to record goodwill impairment than non-family controlled firms. The results are, however, not significant in government-controlled firms. Similar evidence in prior studies finds that Malaysian firms are more likely to recognize and record higher goodwill impairment loss in their first year of adoption than in the subsequent years. Interestingly, in contrast to prior studies, longer chief executive officer (CEO) tenure is found to be positively associated with the likelihood to recognize and record higher impairment of goodwill. Originality/value – This paper is one of few studies that examine the role of ownership structure on goodwill accounting policy choice where ownership structure is highly concentrated and government owned firms play a significant role in the economy. The paper also examines goodwill policy choice before, during the transition and subsequent to the adoption of the goodwill standard in Malaysia, which has not been addressed before.
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Grinyer, John R., Alex Russell, and Martin Walker. "Managerial Choices in the Valuation of Acquired Goodwill in the UK." Accounting and Business Research 22, no. 85 (December 1991): 51–55. http://dx.doi.org/10.1080/00014788.1991.9729417.
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PIROGOVA, OKSANA E., and DARIA G. DENISOVA. "VALUATION OF GOODWILL AS AN INDICATOR OF THE COMPANY'S ADDED VALUE." ECONOMIC TRANSFORMATIONS: THEORY AND PRACTICE 1, no. 1 (2020): 7–19. http://dx.doi.org/10.34286/2712-7427-2020-1-1-7-19.
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Lemishovska, O., and I. Mazur. "Theoretical and methodological principles for accounting reflecton of goodwill: dialectics of development and directions of improvement." Economics, Entrepreneurship, Management 8, no. 1 (July 2021): 59–68. http://dx.doi.org/10.23939/eem2021.01.059.
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The rapid development of market relations, Ukraine's integration into the world economic space, encourage companies, in order to achieve competitive advantages, to explore new ways of capitalization. At the same time, the operations of purchase, sale, merger or acquisition of companies, the value of which directly depends on intellectual capital, are becoming more common. The difference in the assessment of market and book value of intellectual capital leads to a special economic and accounting category - goodwill.Despite the prospects of using such a component of assets as goodwill, today there are still a number of theoretical and practical problems, for example: problem of unambiguous understanding and interpretation of the essence of goodwill, methods of its valuation, and the practice of reflecting it in accounting and reporting by domestic enterprises. The study addresses issues related to establishing the nature of goodwill, its content as an intangible economic resource of the enterprise and the component of the value of capital and the problem object of accounting.The purpose of the work is to reveal the economic essence of goodwill as an object of accounting, to conduct a critical analysis of the current standardization of goodwill accounting, to generalize and systematize of existing problems in the formation of accounting information about this object. The task of this study is to formulate separate proposals for improving methodological approaches to accounting for goodwill, which are obtained on the basis of examined legislative and research sources of information. The scientific novelty lies in the substantiation of the accounting category of goodwill as a subjective value and an objectively existing resource, which should be actually reflected in accounting and reporting.
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Magli, Francesca, Alberto Nobolo, and Matteo Ogliari. "Comprehensibility and transparency of the impairment tests in contexts of crisis." Risk Governance and Control: Financial Markets and Institutions 6, no. 4 (2016): 141–50. http://dx.doi.org/10.22495/rcgv6i4c1art4.
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The application of Impairment Test on Goodwill is one of the most debated issues in the international arena, both in relation to the multiple profiles of subjectivity inherent in the valuation criteria set out in IAS 36 and in relation to the novelty that brings this procedure. For this reason, in our work we analyze Goodwill, Impairment Test and the international regulations governing them that are IAS 36 and IFRS 3. The Goodwill is an important asset for some companies, an intangible asset that arises as a result of the acquisition of one company by another for a premium value. Its assessment is, however, discretionary. Main objective of this paper is to analyze this discretionary and check whether the information resulting from the Impairment Test on Goodwill is in accordance with the provisions of IAS 36. The empirical analysis has been developed on a selected sample relative to utilities in Europe who had recorded higher Goodwill in 2012. The results show that disclosures do not always conform to the requirements of IAS 36; in particular, there is a reluctance of the company managements in providing quantitative information about the sensitivity analysis of the Impairment Test results. The practical implications lead to stress that the reader of the financial statements is not facilitated, not only he fails to assess the effects on the recoverability of the value but also to recognize the reliability of the estimates.
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Nam, Ji-Ahn. "The Impact of Acquiring Firm’s Growth Opportunity on the Valuation of Goodwill." Korea International Trade Research Institute 18, no. 1 (February 28, 2022): 413–28. http://dx.doi.org/10.16980/jitc.18.1.202202.413.
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Aurora, Popescu. "Evolution And Controversies Regarding The Standardization, Valuation And Amortization Of The Goodwill." Annales Universitatis Apulensis Series Oeconomica 1, no. 9 (June 30, 2007): 336–41. http://dx.doi.org/10.29302/oeconomica.2007.9.1.53.
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Lilien, Steven, Bharat Sarath, and Yan Yan. "Fair value accounting, earnings management, and the case of bargain purchase gain." Asian Review of Accounting 28, no. 2 (May 17, 2019): 229–53. http://dx.doi.org/10.1108/ara-04-2018-0091.
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Purpose The purpose of this paper is to investigate the association between bargain purchase gains (BPGs) booked by the acquirer and smoothing of acquirers’ earning performance across time. Design/methodology/approach The authors use a sample of 122 bargain purchase acquisitions in non-financial industries from 2009 to 2012 and a pair-match control group of 122 goodwill acquisitions. Findings The authors find that BPGs, and in particular, the Level-3 fair value estimates of intangible assets acquired, have consistently been used to smooth earnings but that such smoothing activities are not associated with long-term market returns. Originality/value This study is the first one to investigate bargain purchase acquisitions in a broad range of non-financial industries and suggests that managers are using the valuation of intangibles to avoid unfavorable earnings even though these valuations are not credible to investors.
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Furqon, Rahmat Heryat, Azhar Affandi, Jaja Suteja, and Dadang Suwanda. "Brand Valuation of Garment Companies for Tax Purposes." Kontigensi : Jurnal Ilmiah Manajemen 10, no. 2 (December 12, 2022): 282–90. http://dx.doi.org/10.56457/jimk.v10i2.280.
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Valuation of intangible assets is carried out to determine a certain value objectively and professionally in accordance with regulatory provisions for non-monetary assets with no identifiable or unidentifiable physical form (goodwill). Many intangible assets will not be recognized in the financial statements because they fail to meet the definition of an asset or the recognition criteria. The transfer of Intangible Assets often uses Book Value so that there is no tax obligation, the purpose of this study is to determine the Fair Market Value of Intangible Assets in the form of Brands for tax purposes with valuation that is to carry out financial statement analysis, macroeconomic analysis, industry analysis and application of Approaches and Methods Selected rating. The approach used is using the Income Approach with the Royalty Savings Method, the results of the valuation obtained the Fair Market Value of Brand X of Rp. 23,978,000,000; (Twenty Three Billion Nine Hundred Seventy Eight Million Rupiah).
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Saito, Yoshie. "The effect of nonrecurring items on goodwill and CEO market-based compensation." Review of Accounting and Finance 17, no. 2 (May 14, 2018): 150–76. http://dx.doi.org/10.1108/raf-11-2016-0185.
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Purpose This paper aims to analyze the association between goodwill defined as difference between market and book value of equity and reports of nonrecurring items, namely, special items, discontinued operations and extraordinary items to suggest information related to restructuring activities measured by these items can link the valuation and incentive roles of accounting. Economic intuition suggests that successful managerial efforts should increase firm value. Yet, the link between the valuation and stewardship roles of earnings has been difficult to verify. Design/methodology/approach The author first estimates whether nonrecurring items have an incremental ability to explain goodwill, measured as the difference between market and book value of equity, at the industry level and then estimates whether firm-specific accounting bias is associated with the industry-level signals sent by nonrecurring items. The author then analyzes whether these items are associated with the use of chief executive officer (CEO) market-based compensation. Findings The author’ results show that information contained in special items increases firm-specific goodwill, indicating that it sends signals to investors about future growth opportunities, while that of discontinued operations reduces goodwill, suggesting that it provides signals about the adjustments of book value. She does not find any significant informational role for extraordinary items. She also finds that the signals sent by special items are negatively associated with the use of CEO market-based compensation, while those relayed by discontinued operations are positively associated with the use of market-based pay. Research limitations/implications Contrary to prior studies, the results show special items and discontinued operations are both value and incentive relevant. There are two caveats to this analysis. First, owing to the frequent changes in the definition of discontinued operations, the analysis is conducted using data between 1992 and 2003. Second, some might argue that industry-level incremental R2 might not be appropriate for a compensation analysis. However, entities often use industry norms as a benchmark to set CEO compensation. Thus, it is reasonable to think that industry-level signals matter for executive pay. Originality/value The author’s findings suggest that compensation committees in firms across industries consider the information contained in special items and discontinued operations, and selectively alter the level of incentives to encourage managerial efforts.
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Aluko, Bioye Tajudeen, and Abdul-Rasheed Amidu. "CORPORATE BUSINESS VALUATION FOR MERGERS AND ACQUISITIONS." International Journal of Strategic Property Management 9, no. 3 (September 30, 2005): 173–89. http://dx.doi.org/10.3846/1648715x.2005.9637535.
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Business combinations including mergers and acquisitions are important features of corporate structural changes. The Investments Securities Acts (ISA), 1999 charge the Securities and Exchange Commission with the responsibility to review and approve all business combinations in Nigeria. And, real property is an integral factor in many of such strategic business decisions and, need to be set in a business context. This paper, therefore, examines how corporate business entities are and could be valued for mergers and acquisitions through exploratory research. It also explains the relevance of goodwill, marriage value, and fair value concept in corporate business asset valuation. The paper found out inter‐ alia that the value of holding property to the business needs to be measured against the return that the equity could achieve both within the business and elsewhere. It also, prima facie, shows that the role of the valuer is not one of accountant but interpreter of financial and physical information with a clear understanding of the nature of the business under consideration in merger and acquisition.
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Aalberts, Robert J., Terrence M. Clauretie, and Joseph P. Matoney. "Small Business Valuation: Goodwill and Covenants-Not-To-Compete in Community Property Divorce Actions." Journal of Forensic Economics 13, no. 3 (September 1, 2000): 217–31. http://dx.doi.org/10.5085/0898-5510-13.3.217.
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King, Roger T., and William H. Sackley. "Determining Goodwill Valuation in the Small Firm: An Illustration of the Excess Earnings Approach." Journal of Forensic Economics 6, no. 3 (September 1, 1993): 281–82. http://dx.doi.org/10.5085/0898-5510-6.3.281.
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Gadawska, Jolanta. "Effect of Provisions on the Valuation of a Company." Equilibrium 6, no. 2 (June 30, 2011): 109–24. http://dx.doi.org/10.12775/equil2011.015.
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Provisioning means the evaluation of future costs and losses, the estimation of future liabilities towards one’s surroundings, an increase in equity, as well as the real value of assets. During asset valuation, the reserve balance may cause a reduction of the company's value - net assets. This could be a change of a few percentage points. Non-balance provisions cause a decrease in the value of assets, from which liabilities and reserves will be deducted. The value of the enterprise – through asset evaluation – will be lower by a few percentage points. However, it is supplementary capital (capital protection) which has the greatest importance in the methods a company uses in the valuation of assets. As research indicates, retained earnings and additional capital make up 30 -59% of owners equity. When using the multiplier method, reserves have a small indirect effect on the amount of dividends, net income decrease, etc. – due to the reducing of the financial result and taxes. The mixed method takes up an important position in the valuation of a company’s goodwill. Therefore, the relevance of provisions in this valuation, will be lower than the during the valuation of assets. When valuating income reserves do not play a significant role. They are taken into consideration during the adjustment of the financial result, directing it towards cash flow, and for determining the financial outflows in the form of income tax. Provisions may also have a slight influence on the cost of the capital of the enterprise, i.e. a factor discounting cash flow. Provisions are not cash outflows and therefore, in the most popular income methods, they do not play a significant role. Reserves that are tax-deductible costs may affect the amount of tax burdens and thus indirectly affect the cash flow. The biggest and most direct effect of provisions on the valuation of a company can be observed in the asset methods as well as in the mixed methods. However, in the reserve multiplier methods affect the value of the multiplier element of a listed company and the value of the company measured the base element.
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Riaz, Hammad, Abubakr Saeed, Muhammad Baloch, Nasrullah, and Zeeshan Khan. "Valuation of Environmental Management Standard ISO 14001: Evidence from an Emerging Market." Journal of Risk and Financial Management 12, no. 1 (January 29, 2019): 21. http://dx.doi.org/10.3390/jrfm12010021.
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ISO 14001 (Environmental Management Standard) helps corporations to build legitimacy and goodwill, and can be also viewed as an organizational response to institutional pressure to act proactively towards the environment. The purpose of this paper is to investigate how investors in the emerging country value voluntary environmental management standard ISO 14001 certification. The impact of voluntary environmental management standard ISO 14001 on market performance is still not clear. By using event study methodology, this study matched ISO-certified firms with non-certified ones based on three different matching principles that include return on assets, size, and industry. The findings indicated that investors negatively valued ISO 14001 in both the short and long run. The study recommended policy implications for managers, policy makers, and non-government organizations.
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Pallarés Sanchidrián, Jorge, Javier Pérez García, and José A. Gonzalo-Angulo. "Discretion in the application of the goodwill impairment test in European banks." Revista Mexicana de Economía y Finanzas 16, TNEA (September 9, 2021): 1–24. http://dx.doi.org/10.21919/remef.v16i0.702.
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In the absence of amortization of goodwill, the purpose of this study is to identify whether the impairment test was applied uniformly between 2005 and 2015 at the 45 biggest banks in Europe, during the first decade of IFRS application. Likewise, an attempt has been made to verify whether such application has been insufficient and late. Through a significant sample, statistical tools already widely used in other studies have been applied to contrast the behavior of entities. The results obtained show that impairment policies have been applied unevenly in each of the countries. These conclusions could support the return to a valuation pattern that takes into account the systematic amortization of goodwill, apart from its impairment. This paper reveals how impairment in European banks has been recognized during a crucial period of time that includes a major financial crisis. The study suggests a discretionary and opportunistic implementation of accounting regulations which does not reveal the economic conditions inherent to the financial activity of the leading European banks, making comparability difficult and, ultimately, making the financial information less relevant.
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Hellman, Niclas, Patric Andersson, and Emelie Fröberg. "The impact of IFRS goodwill reporting on financial analysts' equity valuation judgements: some experimental evidence." Accounting & Finance 56, no. 1 (January 8, 2016): 113–57. http://dx.doi.org/10.1111/acfi.12189.
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Ballwieser, Wolfgang. "International Valuation Standards (IVS) – Bedarf, Reichweite, Würdigung, diskutiert anhand der Bewertung von Unternehmen und Goodwill." Schmalenbachs Zeitschrift für betriebswirtschaftliche Forschung 72, no. 1 (March 2020): 71–94. http://dx.doi.org/10.1007/s41471-020-00084-3.
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DUARTE, DENIZE LEMOS, ANTONIO SERGIO TORRES PENEDO, and VINÍCIUS SILVA PEREIRA. "ANÁLISE MULTIDIMENSIONAL DO VALUATION DA PETROBRAS." Revista Alcance 28, no. 3(Set/Dez) (August 31, 2021): 298–314. http://dx.doi.org/10.14210/alcance.v28n3(set/dez).p298-314.
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Objetivo: Este estudo teve como objetivo avaliar se houve impacto em relação os eventos de corrupção e as fraudes no valuation da empresa Petrobras
Relevância: A relevância desse estudo encontra-se em reforçar a importância econômica e financeira no processo de avaliação de empresas, de forma a direcionar as decisões dos stakeholders e dos próprios acionistas num ambiente desfavorável e também motivar novos trabalhos no processo de avaliação de empresas e de gestão baseada no valor. Esta pesquisa pode ser utilizada como um guia compacto para comparação das diversas métricas de valuation na estimação do valor, tendo como base de uma das maiores empresas do segmento de petróleo com eventos de corrupção e fraudes. Esses modelos de avaliação são usados por muitos analistas, empresas de investimento e instituições em um nível altamente detalhado, a fim de determinar o valor mais justo de uma empresa para fins de fusões, cisões e aquisições, dissolução de sociedade, liquidação de empresas, investimentos e avaliação de performance de gestores. Essas demandas implicam em decisões que determinam a continuidade ou a descontinuidade de um investimento ou negócio.
Resultado: Como resultado, verificou-se uma discrepância nos modelos analisados, apesar de alguns modelos seguirem a mesma tendência de queda ou alta. Os métodos de Valor de Mercado e o Patrimonial Contábil foram os que mais se aproximaram, sugerindo que a Petrobras possui baixo Goodwill, e que o preço formado pelo mercado se aproxima do seu valor patrimonial. Cada método possui sua limitação, bem como algumas avaliações possuem certo grau de subjetividade, pois lidam com expectativas, como no caso dos cenários projetados para o modelo de FDC ou CFF, devido incorporar premissas subjetivas e hipóteses. Destaca-se que o valor da empresa Petrobras, nas múltiplas dimensões de valuation, teve um impacto de deterioração em decorrência das fraudes, corrupção e por outros contratempos na gestão do negócio, como baixa eficiência operacional, alta concentração de endividamento e uma sistemática contínua de desinvestimentos, que está alinhada ao planejamento da companhia.
Conclusão: não existe uma métrica de valuation mais correta ou mais assertiva em sua totalidade, mas sim, um parâmetro direcional, no qual deve ser utilizado como base para a tomada de decisão concomitantemente com outros indicadores.
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Du, Fei. "Discussion of ‘The impact of IFRS goodwill reporting on financial analysts’ equity valuation judgements: some experimental evidence’." Accounting & Finance 56, no. 1 (January 25, 2016): 159–64. http://dx.doi.org/10.1111/acfi.12197.
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Zhou, Yuhang. "Effectiveness of performance compensation commitment under Information Inequality." E3S Web of Conferences 235 (2021): 03082. http://dx.doi.org/10.1051/e3sconf/202123503082.
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The demand of information society promotes the production of performance compensation commitment, which is used to alleviate the information asymmetry between investors and listed companies. The generation of performance compensation commitments has reduced valuation difficulties and other problems to a certain extent, lowered M&A costs and improved M&A efficiency. However, as the sample size increases, its drawbacks have gradually emerged. Youbo Pharmaceutical has stepped on the line for three consecutive years to achieve accurate performance. After the commitment period expires, the performance has dropped by more than 50%, so the authenticity of its performance has been questioned. Through the analysis of its announcement and various indicators, I find that the performance compensation commitment can not bring good market reaction after the commitment period, nor can it improve the integration effect, and even there are some behaviors such as premium, goodwill impairment risk and earnings management.
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Machová, Veronika, Tomáš Krulický, and Michaela Brožová. "Valuation of goodwill using weighted average return on assets: assessment of average transport and storage enterprise in the Czech Republic." Entrepreneurship and Sustainability Issues 10, no. 2 (December 1, 2022): 510–26. http://dx.doi.org/10.9770/jesi.2022.10.2(32).
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Dmitrenko, I. M., R. O. Kostyrko, and V. P. Bondar. "Methodological Principles of the Accounting for Intangible Assets from the View of National and International Standards." Statistics of Ukraine 83, no. 4 (December 17, 2018): 111–20. http://dx.doi.org/10.31767/su.4(83)2018.04.13.
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The article defines the basic accounting items that determine the impact on the complex of methodological principles of accounting and reporting generalization of information about intangible assets. The complex of basic accounting positions for intangible assets is proposed in the following composition: definition of the object of accounting; method of identification; response to goodwill; how to receive and how to pay; the criteria for recognizing the asset is intrinsic; method of initial assessment; revaluation model; response to impairment; conditions for the choice and application of methods of accrual of depreciation; directions of disclosure.
The key methodological principles of accounting for intangible assets are systematized on the basis of a comparative analysis of the provisions of national and international standards. As a result of the comparative analysis, both conceptually similar principles and those that are characterized by significant differences are established. In particular, this applies to: the ways of obtaining and payment of the intangible assets, for which the IAS does not provide for the free receipt and payment of an intangible asset to the authorized capital of the enterprise, which emphasizes the nature of such assets in view of the obligation to receive future economic benefits; the definition of the value of internally generated goodwill is precisely in IAS, which contributes to a reasonable separation from the value of its own intangible assets in the event of the merger of enterprises; the initial valuation of the intangible assets, for which IAS prioritizes the valuation at cost rather than fair value, as defined by National Accounting Standards, due to the dependence of the usually unpopular phenomenon - the existence of an active market for such assets; the variability of the choice of depreciation methods for the intangible assets, for which IAS offers more opportunities to take into account the specifics of the use of these objects during the formation of depreciation costs; directions of disclosure of the intangible assets information in the notes to the financial statements, which are clearly defined in the IAS.
Comments on the conditions for the implementation of the requirements of national and international standards for the accounting of intangible assets at the level of economic entities from the point of view of the established differences and their consequences are given. It is proved that a much higher level of transparency of information about intangible assets is provided in the case of accounting and financial reporting by entities in accordance with the requirements of IAS and IFRS.
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Pozdnyakov, Yuri Vladimirovich, Skybinska Zoryana, and Gryniv Tetiana. "Price-forming factors choice grounding at intangible assets with negative depreciation independent valuation/appraising." Independent Journal of Management & Production 11, no. 6 (October 1, 2020): 2112. http://dx.doi.org/10.14807/ijmp.v11i6.1170.
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Independent expert valuation/appraising of intellectual property rights objects, such as brands and goodwill, performed by the Costs approach, is based on economic indicators of these intangible assets utility degree, which are connected with the sum of all expenses, related to appraised asset creation and support. These indicators are used as a primary data for these intangible assets market value determination. All these indexes are differently related to the brand value, and relationship between these parameters researches, indisputably, presents both theoretical and practical interest. Because of the cross-correlation relationship closeness between assets market value and these primary data parameters directly depend estimation results accuracy and reliability. The work is verification of basic hypothesis, in obedience to that at the brands valuation/appraising procedure performing as primary data may be recommended to use those indicator parameters, which are characterized with the closest statistical relationship and, respectively, the highest cross-correlation coefficient. Research is based on fact that these intangible assets are able to change their value characteristics in both directions, and change the annual depreciation sign during the separate periods of economic life, made it positive or negative. The purpose of the article is to define the quantitative estimations of cross-correlation relationship strength between economic parameters, which are used as primary data source in Costs approach, and estimated brand value; to perform the comparative analysis of cross-correlation relationship density between the brand value, appraised as intellectual property object, and these economic parameters, that are used as the main price-forming factors; researching and approbation of methodology, based on this cross-correlation relationship closeness quantitative indexes determination, on the certain examples of brands evaluation. Finally, the main purpose is to set the parameter, for which the correlation coefficient is the highest, and which is most expedient to use as primary data source at economic measurements performing.
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Mohamed, Omary, and Crispin John Mbogo. "Effects of Initial Public Offering on the Value of a Company: A Case Study of Tanzania Breweries Limited Company, Dar es Salaam." International Journal of Engineering, Business and Management 6, no. 3 (2022): 60–68. http://dx.doi.org/10.22161/ijebm.6.3.7.
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This study aims to analyze effects of initial public offering on the value of a company in Tanzania using Tanzania Breweries Public Limited Company as a case study. The specific objectives of the study were to assess the influence of stock price, asset valuation and intangible assets on the value of Tanzania Breweries PLC. The study adopted explanatory research design that included time series analysis (TSA) because analysis of the past is vital for forecasting the future and employed market timing theory. The method of data collection was documentary analysis; E-views was used to analyze the data which were collected from TBL, DSE and UNCTAD from 2010 to 2020. After confirming the existence of long-term associations between variables in our model, the collected data was submitted to ordinary least square (OLS) and t-values using the vector error correlation model. Results of the study indicated that asset valuation (ASSV) had a positive but small impact on the value of the company. While the short and long-term coefficients test between intangible assets (INTA) and stock price (STKP) had a negative and minor impact on Tanzania Breweries Company’s value at 5% of critical value. It is therefore suggested that organizations should focus on developing goodwill as one of the intangible assets that attract investors and shareholders. Management as well as owners of companies should be trained on the importance of using IPO as a source of improving the equity capital rather than using debt instruments. The government should strengthen policies and loosen some regulations, particularly for foreign investors, in order to attract more direct and indirect investment.
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Joshi, Upasna. "Human Resource Accounting System in Selected Indian Companies." Journal of Social and Development Sciences 3, no. 2 (February 15, 2012): 69–76. http://dx.doi.org/10.22610/jsds.v3i2.687.
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The human resource may be seen as the most fundamental of all available resources to an economy or an organization. Human resources are energies, skills, talents and knowledge of people that are or can be potentially applied to the production of goods and services. Corporations cannot run by machines or systems alone, however smart those may be. The human element in it is inevitable, even for knowledge based lean organizations of the 21st century. It is an irony that valuation of this important asset is not reflected in the books of accounts. However to enhance goodwill and attract investors, need is being felt for human resource accounting. In our present paper, an attempt has been made to do the comparative study of the human resource accounting practices of CCI, HPCL, Infosys and Rolta India Limited. The variables that are important for the purpose of human resource accounting are identified and by analyzing, the annual reports of these selected companies scores are assigned to the organizations and mean scores for these organizations were calculated. Ranks to the organizations are also given based upon the extent of the HRA information reported in their annual reports.