Research On The Impact Of Goodwill "Impairment+Amortization" Method On Enterprise Performance

With the continuous development of China's M&A transaction market,the number and amount of transactions continue to rise,and high-premium M&A has become a common phenomenon.However,enterprises,which have confirmed a large amount of goodwill through high-premium M&A,will also recognize a high amount of goodwill impairment losses in subsequent fiscal years.This does not seem to be in line with the economic expectations that goodwill can bring “excessive income” to enterprises,and also results in significant performance fluctuations.At the end of 2018,there was a collective “explosion” of A-share goodwill.Why companies have “exploded”,whether there is a problem with the subsequent measurement of goodwill,and whether there is a more suitable follow-up measurement method that can improve the quality of accounting information and reflect more real business performance,these issues have been much discussed.This paper combines theoretical research and analysis of the actual A-share market,explores the feasibility of the “impairment + amortization” method,and uses case analysis as a starting point to explore the effectiveness of this treatment method and the degree of accounting information quality improvement.There are mainly four follow-up treatment methods used in goodwill in history.The higher recognition is the impairment test method and amortization method.The amortization method was been cancelled at the beginning of this century.At present,China and most countries in the world are using the impairment test method.However,by analyzing the current situation of the goodwill and impairment loss of goodwill of A-share companies,it is found that the impairment test method is not without its shortcomings.Companies often do not perform the impairment test seriously,and the impairment of goodwill has become a result of manipulation means.But at the same time,the data analysis results also show that the impairment of goodwill is relatively common in the A-share market.Therefore,it is necessary to improve the subsequent accounting treatment of goodwill.The “impairment + amortization” method,which has been used as an accounting treatment method,has merit.In the realistic background of generally high reputation,this method can effectively reduce the space for corporate manipulation.And it can also be amortized through the system,to alleviate the decline in performance caused by the sudden impairment of goodwill.The case company of this paper,“Ourpalm”,calculated the impairment of 60% of the book goodwill in 2018.By applying the “impairment + amortization” method to the case company,comparative analysis found that the “impairment + amortization” method can expose the business problems of the enterprise in advance than the “impairment test method”,that is,the case company covered the true performance of the enterprise under the impairment test method.However,the “impairment + amortization” method also has certain shortcomings.For example,the impact on accounting information disclosure and performance authenticity is limited,and there are too many practical factors to be considered in the design of the method.In the end,this paper also gives suggestions on the formulation and improvement of goodwill accounting standards,recommendations to regulatory authorities and enterprises,and the future development of the “impairment + amortization” method.