A Case Study Of Zeus Entertainment's Goodwill Impairment

Active high premium M & A activities in the capital market has accumulated a huge amount of M & a goodwill assets for the A-share market.With the end of the 3-4-year performance commitment period of the M & a target,the goodwill impairment caused by the M & A activity has begun to highlight in the capital market.Since 2017,the risk of goodwill impairment has become one of the key risks in China's capital market supervision and prevention.Many goodwill assets in the books of listed companies,which can bring excess profits to enterprises before,now become a huge burden to damage the company's earnings and operation.In fact,M & a goodwill is not terrible,its essence is to represent the excess earning capacity of the enterprise due to M & A;the same reasonable goodwill impairment is beneficial,which will neither damage the interests of listed companies nor disturb the order of the capital market.Therefore,the disorder of goodwill in A-share market is the problem of goodwill risk on the surface,but in essence,it conveys the problem of internal and external governance and supervision of the company in the previous year.Based on the merger and acquisition of goodwill,this paper selects Tianshen entertainment,a representative goodwill impairment company in China's A-share market,and analyzes the event of Tianshen entertainment goodwill impairment in combination with the case company itself and the subject company involved in the huge goodwill impairment storm.According to the review of classical literature and the summary of basic theories about goodwill impairment in the first two chapters,this case starts from four starting points: initial recognition of goodwill,signs and opportunities of goodwill impairment,measurement basis of goodwill impairment and disclosure of goodwill information,so as to judge whether the value of goodwill in the initial measurement of goodwill is rational,and then studies the attention of listed companies to impairment signs And whether to manipulate the timing of provision for performance bath,and then when the listed company through the impairment test to determine the provision for impairment of goodwill at the end of the year,whether the management uses the impairment test as a means of earnings management to control the proportion of provision for impairment,as well as the impact of intermediary professional degree on impairment measurement,finally to explore the disclosure of goodwill information of listed companies Problems and root causes in.It is found that,at the time of the formation of M & a goodwill,due to the subjectivity of the valuation mechanism of the income method and too optimistic about the risk prediction,goodwill valuation,even within the acceptable range,is vulnerable to the impact of future risks,and the asset evaluation agency has not fulfilled its responsibilities,so the goodwill premium formed in this case is stable for the profits of the evaluated enterprise,and the The stability of the industry and market put forward relatively high requirements.However,high goodwill risk companies often ignore the judgment of goodwill impairment signs and miss the opportunity to predict the false high goodwill in advance,and delay the accrual of goodwill impairment loss when the performance is good,but when the company is in business difficulties,they set up the provision for goodwill impairment for the purpose of performance bathing.However,the operation of the impairment test method of goodwill follow-up measurement is complex and unverifiable,which makes goodwill follow-up measurement often become a tool for management to manipulate profits for earnings management,and the judgment ability of measurement personnel and auditors will also affect the fairness of goodwill impairment amount.In the disclosure of goodwill information,the company's controlling shareholders have too much discourse power,which leads to the crisis of internal control,which is embodied in the inaccuracy and incompleteness of the disclosure of goodwill information,while the lack of the key information of goodwill will lead to the risk of goodwill impairment.Based on the above analysis,we can see the essence of goodwill risk through the appearance of goodwill impairment.We can respectively focus on the future sustainable profitability of the target company and the internal management of the enterprise;improve the professional ability of the third-party intermediary,strengthen the supervision of the market supervision department;and establish a systematic goodwill accounting system,including according to the actual situation We hope that we can make a contribution to the supervision and control of goodwill in the capital market in the future.