A Study On Internal Generated Goodwill From Resource-Based Theory

Nowadays, the M&A is sweeping the globe. The variance between purchased price paid in M & A and the net fair value of the assets of the target firm is huge, which makes both the accounting theory field and the accounting practice field focus on the research of purchased goodwill accounting treatment increasingly.In current days, the "goodwill" in financial statements acts like a cork, and it has never reflected the source of "purchased goodwill", just to make up for variance between purchased price paid in M&A and the net fair value of the assets of the target firm, which leads to the accounting inconsistency between " purchased goodwill" and " internal generated goodwill".What is more, the lack of such Accounting Information as "internal generated goodwill" may lead to the following conditions: firstly, it's not conducive to the interests of relevant stakeholders to make right economic decisions; Secondly, companies may damage the long-term interests in order to "whitewash" the financial statements; Thirdly, it's not conducive to prevent "short-sighted" behaviors of executives, and may increase the agency cost.This paper concentrates on the nature of "internal generated goodwill" and the creation of a new disclosure method to improve the inadequate accounting information and means to find a feasible method of "internal generated goodwill" disclosure under the existing conceptual framework of financial accounting in order to ease the current accounting information imbalance between supply and demand.Therefore, after reviewing the viewpoints of goodwill of other schools, this paper studies the nature "internal generated goodwill" deeply and systematically learning from "Resource-Based Theory". And based on this, this paper combines management, mathematical statistics and other relevant knowledge to establish an appraisal system of "internal generated goodwill indicators" and to design "internal generated goodwill index table". Because of the limitations of the existing conceptual framework of financial accounting, this article mainly focuses on a feasible method of "internal generated goodwill" disclosure at this stage, which will follow the existing conceptual framework of financial accounting to disclose "internal generated goodwill index" in the notes of financial statement, not to recognize "internal generated goodwill" as an asset. This is the innovation of this paper, and the author is trying to find a transitional approach of "internal generated goodwill" disclosure which can improve the integrity ofthe accounting information without changing the conceptual framework of financialaccounting.