Research On Goodwill Accounting Based On Contribution Degree

With the increasingly common phenomenon of mergers and acquisitions, one-third of enterprises are faced with the treatment of goodwill, this proportion is still increasing year by year. At the same time intangible assets is increasingly becoming an important part of the core competitiveness of enterprises. Today, companies’value creation relies more on the corporate culture, organizational management, high-quality talent, innovation and other intangible resources, and these parts are almost always the parts of goodwill. To judge a company’s value, we must know the company’s goodwill. Goodwill is a combination of intangible resources that contributes to enterprises’excess earnings capacity. The disclosure of goodwill information is useful to identify the core competitiveness for businesses, to make the right decisions for investors and to judge the enterprise value for potential buyers.The generated goodwill is excluded from the financial statements as it can’t be reliably measured, which makes information users can’t get the information, thus affects the decision-making. At present, confirmation of purchased goodwill does not reflect its nature. Understanding the nature of purchased goodwill has an important effect for the correct handling of purchased goodwill. Treatment of goodwill is an urgent problem to be solved at practice circle, but there are no consensuses on many issues, which resulting in many difficulties in practice.This paper is divided into five parts:The first chapter explains the background of this study and research purposes, to introduce literature review and research framework and major innovations.Chapter Ⅱ analysis the basic theory and the theoretical basis for goodwill, describes the goodwill of the definition, characteristics and the measurement of generated goodwill. Generated goodwill is the basis of purchased goodwill which derived from the definition of goodwill, with the theoretical basis for disclosure shows the importance of disclosure goodwill information. Chapter Ⅲ applies importance level to the disclosure of generated goodwill based on relevant theoretical analysis. This chapter use empirical analysis on traditional food and beverage manufacturing industry, high-tech pharmaceutical industry and the emerging real estate industry which are three major constituent elements of goodwill based on contribution degree. At the same time explained how to use the importance level in brand value processing and introduced several other reference treatment.Chapter IV focuses on the nature of purchased goodwill. This paper using case analysis splits purchased goodwill into two parts, the merger costs exceed the value of the target company as part of the value of M&A motivation, target company’s value more than the fair value of identifiable net assets is the generated goodwill value, which can be seen that generated goodwill is the basis of purchased goodwill, then verified by the data that purchased goodwill can reflect the buyer’s excess profitability in the future due to the merger based on the contribution degree.Chapter V is the concluding part of this article.This article focuses on importance level in dealing with generated goodwill and analysis the nature of purchased goodwill.