Accounting goodwill arises as a result of business combinations and appears in a consolidated balance sheet of an acquirer. It is an intangible asset which reflects an excess of value of an acquired business as a whol...Accounting goodwill arises as a result of business combinations and appears in a consolidated balance sheet of an acquirer. It is an intangible asset which reflects an excess of value of an acquired business as a whole over a summed value of its identifiable net assets. Since 2010, the International Financial Reporting Standards （IFRS） allow for two alternative methods of measuring goodwill in those business combinations, where an acquirer obtains a control over a target company without obtaining 100% share in its shareholder＇s equity. Under one of these methods, which is called a ＂full-goodwill method＂, the goodwill attributable to non-controlling interests in subsidiary is measured at fair value. Thus, the main accounting problem with this method lies in its requirement to estimate the fair value of non-controlling interests. This paper suggests that the ＂full-goodwill method＂ may sacrifice financial statement reliability for its alleged relevance, with significant potential for ＂creative accounting＂. The problems with reliability and transparency of financial statements, when ＂full-goodwill method＂ is applied, are illustrated by a real-life example of the takeover of Formula Systems Ltd. by Asseco Group （one of the biggest IT companies in Europe, listed on the Warsaw Stock Exchange）.展开更多
Intangible assets are parts of the companies＇ balance sheet, but given their intangible nature, they cannot be qualified as financial assets as other incomes can be. Therefore, the valuation, even if reflected in acc...Intangible assets are parts of the companies＇ balance sheet, but given their intangible nature, they cannot be qualified as financial assets as other incomes can be. Therefore, the valuation, even if reflected in accounting reports, is far from objective, and each company considers it in accordance with their sectors or auditors. Auditors, consultants, and business schools are developing alternative tools for measuring these assets, but there is not a consensus formula that quantifies the business value of intangibles. In recent years, communication analysts and consultants have developed brand valuation and reputation methodologies, which are starting to have a relative weight in business management. The proposed research work is a review of the current methodologies of reputation valuation as a starting point for creating a reference model formula for the valuation of intangibles that provide professionals and experts in the field with a worldwide recognized tool.展开更多
文摘Accounting goodwill arises as a result of business combinations and appears in a consolidated balance sheet of an acquirer. It is an intangible asset which reflects an excess of value of an acquired business as a whole over a summed value of its identifiable net assets. Since 2010, the International Financial Reporting Standards （IFRS） allow for two alternative methods of measuring goodwill in those business combinations, where an acquirer obtains a control over a target company without obtaining 100% share in its shareholder＇s equity. Under one of these methods, which is called a ＂full-goodwill method＂, the goodwill attributable to non-controlling interests in subsidiary is measured at fair value. Thus, the main accounting problem with this method lies in its requirement to estimate the fair value of non-controlling interests. This paper suggests that the ＂full-goodwill method＂ may sacrifice financial statement reliability for its alleged relevance, with significant potential for ＂creative accounting＂. The problems with reliability and transparency of financial statements, when ＂full-goodwill method＂ is applied, are illustrated by a real-life example of the takeover of Formula Systems Ltd. by Asseco Group （one of the biggest IT companies in Europe, listed on the Warsaw Stock Exchange）.
文摘Intangible assets are parts of the companies＇ balance sheet, but given their intangible nature, they cannot be qualified as financial assets as other incomes can be. Therefore, the valuation, even if reflected in accounting reports, is far from objective, and each company considers it in accordance with their sectors or auditors. Auditors, consultants, and business schools are developing alternative tools for measuring these assets, but there is not a consensus formula that quantifies the business value of intangibles. In recent years, communication analysts and consultants have developed brand valuation and reputation methodologies, which are starting to have a relative weight in business management. The proposed research work is a review of the current methodologies of reputation valuation as a starting point for creating a reference model formula for the valuation of intangibles that provide professionals and experts in the field with a worldwide recognized tool.
