Research On The Issue Of Goodwill's Impairment In China's Enterprise

In recent years, China's capital market has been experienced the rapid development, medium and small enterprises are seeking opportunities in the rapid development of capital markets for their own growing. Mergers and acquisitions has become one of the main compete means in the capital markets. It is also a common activity of market operation. The target of M&A is the integration of enterprise resources, through the enterprise ability and knowledge accumulation to contribute to the growth of the enterprise. Mergers and acquisitions will often create the "goodwill" which is the most difficult identify and processing assets. For the academic study of goodwill has been very controversial, more research are focused on the goodwill's accounting recognition and measurement, but the research for goodwill's subsequent measurement is less. The studies of goodwill in China started late, not only in the theoretical research, but also perform badly in practice. Since the revision of accounting standards, subsequent measurement of goodwill use impairment test method instead of accumulated amortization method, new challenges has been taken to the goodwill application in practical. Nowadays, most companies choose not to provision for impairment loss of goodwill asset in the end of accounting year. But if the truth of the goodwill's value cannot be reaction in the report, it will provide unreliable accounting information to effects the investor's decision. Research on the issue of impairment of goodwill has significant influence in both theory and practice.This paper used normative research method and case analysis method. The research results have been achieved on the basis of analyzing and summarizing the research results in domestic and foreign, and also clarify the theoretical basis relates to goodwill. The case of Wuzhou Communication selected from the website of China Securities Regulatory Commission(CSRC), because of the enterprise has been issued qualified opinion by auditor. The auditor not recognized the enterprise accounting process of goodwill. By arranged the case, sorting out three controversial questions: did Wuzhou Communication make the correct judgment of goodwill's provision for the impairment; goodwill impairment is not easy to determine how much should be provisioned and did the qualified opinion has its own problems; external supervision has no determination result of whether goodwill should impairment or not, so if there is also some limitations in our accounting standards. Around three issues of theoretical analysis to find out the reason impact the judgment of goodwill's impairment: analysis begins from enterprise's angle and auditor's angle, and results shows that each side has their correctness but also existing problems. It confirms that the case for goodwill impairment cannot come to an unified conclusion and became an unresolved issues. The analysis based on the theory of accounting standards, this part of analysis compared US GAAP?International Accounting Standards and China's accounting standards which relates to the impairment of goodwill, identify the issues which effect the accuracy of goodwill's impairment judgment. The results combined with case studies and China's national conditions, summarizing enlightenment of this case and provide reasonable suggestions to improve the reliability and accuracy of the goodwill's impairment that our enterprise made.The main contribution of this paper is analyzing from different angles to find the problems exist in the judgment of goodwill's impairment as much as possible and comparing the IAS, US GAAP and Chinese accounting standards differ in the relevant specifications of the impairment of goodwill, taking the critical control points which effect judgment of goodwill impairment as logic analysis line. Combining the professional judgment of accountant with goodwill's impairment is an unique perspective. This paper proposes to strengthen the internal governance structure, strengthen the guidance power of valuation technique and operational standards, expand the scope of information disclosure of goodwill impairment, and build the coordination mechanism of difference discrepancy of professional judgment as suggestions. The shortcomings of this paper are the study about goodwill's impairment is only on the primary stage and the theoretical analysis is not thorough enough. The suggestions came up from the case study, so its universal application still needs to be confirmed.