Discussion Paper Business Combinations-Disclosures, Goodwill and Impairment issued by the IASB for comments

Last updated: 09 May 2020

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The IASB has issued a Discussion Paper on business combinations, seeking feedback on potential improvements to how companies report information about acquisitions. The paper explores enhancing disclosures to help investors assess acquisition success and re-evaluates the accounting for goodwill, including its impairment testing. The ASB of ICAI invites comments from stakeholders in India to ensure their concerns are raised at the international standard-setting stage.

Mergers and acquisitions-referred to as business combinations in IFRS Standards- are often large transactions for the companies involved. These transactions play a central role in the global economy. IFRS 3Business Combinationssets out the accounting requirements for these transacti

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FAQ :

The paper seeks feedback on possible improvements to the information companies report about acquisitions, aiming to help investors assess their success, and on how companies should account for goodwill.

The paper focuses on improving disclosures about acquisitions, including reporting acquisition objectives and performance against them, and improving the accounting for goodwill, particularly its impairment testing.

The IASB is suggesting changes that would require companies to disclose their objectives for an acquisition and, in subsequent periods, how the acquisition is performing against those objectives.

The IASB's preliminary conclusion is to retain the impairment-only approach for goodwill, rather than reintroducing amortisation, as there is no clear evidence that amortisation would significantly improve reported information for investors.

Comments can be submitted electronically via the ICAI website or by email to commentsasb@icai.in by June 30, 2020.

Yes, the ASB proposes to organise webcasts on the Discussion Paper, with further details to be announced in due course.