On Internally Generated Goodwill Accounting Issues

Since entering new century, global business combinations increase sharply. Mergers and acquisitions lead to great combination goodwill. It's necessary to focus on how to regulate purchased goodwill. Since it can't be formed within a short period time, it indicates that under knowledge economy, the proportion of goodwill in the enterprise's assets will be more and more large, this is extremely so in the hi-tech industry. The theory and practice of goodwill is a tough problem in accounting, economics etc. Among them, the recognition, measurement and disclosure of internally generated goodwill is a focus of the problem. Based on this consideration, the writer has chosen this subject as research project.In accounting circle, goodwill is generally divided into two parts: internally generated goodwill and purchased goodwill. It's generally accepted that internally generated goodwill is a kind of special resource that contributes to enterprises' excess earnings capacity. In current accounting pattern, purchased goodwill is recognized, internally generated goodwill is not recognized awing to its reliability and conservation. But the recognition of internally generated goodwill is very important to the development of the accounting theory and improvement of accounting information quality and accounting practices. When the economy develops, the innovation of financial instruments impels the accounting circle to re-establish some new standards for recognition and measurement. It makes preparation in theory to salve the difficult problems, including the problem of internally generated goodwill.This thesis makes a study in the recognition, measurement and disclosure of internally generated goodwill, points out the problems of the current accounting pattern and puts forward personal viewpoint. Firstly, this thesis deals with the basic definition of goodwill and the formation of goodwill. Then, the author introduces the common accounting recognition criteria, and holds that internally developedgoodwill should be recognized from the aspects of accounting target, accounting recognition criteria and accounting information quality. As for the measurement of internally generated goodwill, the author deems the direct measurement mode is fit for the internally generated goodwill. Finally, the author selects 180 companies listed in Shanghai Stock Exchange as samples. Through analyzing the disclosure of internally generated goodwill, the author finds some problems in the goodwill accounting of our country. Of course, the idea will face many difficulties to become true. But the author believes that the goodwill problem will be enriched and improved in the debate and study of the theory circles and repeatedly tested and revised in practice.