Research On Goodwill Accounting Issues In Media Industry

In recent years,the state has vigorously supported the film and television industry.With the support of various favorable national policies,the film and television industry has attracted a large influx of capital,leading to frequent mergers and acquisitions.For the purpose of diversifying business management and realizing synergy effects,many film and television industries use mergers and acquisitions activities for extensional development.The upsurge in M&A activity has pushed goodwill to continue to rise.However,the high goodwill formed by high-premium M&A activities not only did not bring corresponding excess returns to the company,but also brought many risks to the company.High goodwill will inevitably plant a "landmine" for future goodwill impairment,which will not only increase the uncertainty of corporate performance,but also seriously affect the stability of the capital market.In response to this kind of phenomenon,this article takes WANDA CINEMAS,a leading company in the film and television industry,as an example,and analyzes the reasons behind WANDA CINEMAS’ high goodwill and huge impairment,as well as the economic consequences of goodwill issues,to explore and resolve high-premium mergers and acquisitions.The unreasonable part of the huge impairment of goodwill is hoped to provide a reference for such companies to deal with goodwill issues in the future.First of all,this article sorts out the related literature and basic theories of goodwill.Next,this article starts with the phenomenon of “turning profits into losses” caused by Wanda Film’s sudden provision of huge impairment of goodwill in 2019,discusses the problems reflected by this phenomenon,and expands the case based on the logic of “problems-causes-economic consequences” analysis.Among them,in the "problem" part,this article analyzes the formation process of WANDA CINEMAS’ high goodwill and the unreasonable part of goodwill impairment;in the "reason" part,this article analyzes the reasons for the formation of high goodwill and the huge impairment of goodwill.The reasons for formation are analyzed from two perspectives;in the "economic consequences" part,this article analyzes the financial status,financial risks and stock price performance.Finally,draw conclusions and make relevant suggestions based on the above analysis.The case study found that: First,due to the limited identification of intangible assets and insufficient prudence in the income method assessment,combined with the abuse of performance commitments,the goodwill was too high at the time of initial recognition;second,the huge impairment factor has a high premium Mergers and acquisitions lay hidden dangers for subsequent huge impairment.At the same time,the target company’s performance commitments are not up to standard and the subjectivity of the impairment test makes WANDA CINEMAS accrue huge impairment of goodwill;third,the goodwill problem of WANDA CINEMAS not only affects the company’s financial status This has brought a negative impact,has also plunged the company into a financial crisis,and at the same time caused the company’s stock price to fall,damaging the rights and interests of shareholders.In this regard,this article proposes recommendations on the issue of goodwill from three aspects: restraining the formation of high goodwill,controlling huge impairment risks,and strengthening the supervision of information disclosure,so as to protect shareholders’ rights and maintain the stability of the capital market.