Case Study On Accounting Treatment Of Goodwill Of Gosun Holding Company

China’s economy has entered a critical period of transformation to achieve high-quality development,and insisting on supply-side structural reform is a fundamental cure for improving the quality of economic growth.As one of the important ways to optimize the allocation of resources in the capital market,mergers and acquisitions not only meet the upgrading demand of Chinese enterprises,but also provide important support for realization of supply-side structural reform,and are strongly supported by China Securities Supervision Commission.However,with the rapid growth of the number and scale of mergers and acquisitions,the problems of "thundering" goodwill and "changing face" performance of a-share listed companies also come one after another.Affected by the high goodwill formed by mergers and acquisitions,it is more difficult for enterprises to prevent the risk of goodwill impairment.If it cannot be effectively avoided,it will cause a large negative impact,leading to a sharp decline in net profit and even a large loss.At the same time,the sharp decline in net profit sent a negative signal to the securities market,resulting in a continuous drop in the company’s stock price,damaging the benefits of shareholders and investors.The frequent occurrence of "Black swan" events of goodwill impairment has aroused extensive attention in the accounting field,and intense discussions have been launched on the accounting treatment of goodwill.Based on this background,this paper firstly sorts out the relevant domestic and foreign literature from the perspectives of definition and accounting treatment of goodwill and economic consequences of goodwill accounting information,summarizes the shortcomings of the existing studies,and then leads to the research content and ideas of this paper.Secondly,theoretical analysis on the changes of goodwill accounting standards at home and abroad and earnings management of goodwill accounting are made to lay a foundation for subsequent case studies.Thirdly,with Gosun Holding company as the object of case study,in accordance with the logic "goodwill formation → subsequent measurement and disclosure of goodwill → economic consequences of goodwill impairment accounting information → problems in goodwill accounting treatment →optimization of goodwill subsequent accounting treatment",this paper systematically analyzes the goodwill accounting treatment,explores the economic consequences of goodwill impairment from the perspectives of corporate finance and stock market,further discusses the problems in initial recognition,subsequent measurement and information disclosure of goodwill,and finally simulates the improvement of subsequent accounting treatment of goodwill.Through case analysis,this paper draws the following conclusions: first,the current criteria no longer amortize the cost of goodwill,which leads to the fact that goodwill information cannot reflect the inevitable trend of its value declining year by year,resulting in the imprudent results of inflated asset value and high profits in each period.Second,the provision of goodwill impairment on the basis of no annual amortization will have a huge impact on the financial information of enterprises and cause turbulence in the securities market.The analyses of financial effect based on net profit,profitability,debt paying ability and growth ability and the market reaction of event study method show that goodwill impairment will have a serious inhibitory effect on the future development of the company.Third,the main reasons for the goodwill impairment of Gosun Holding are that the operating performance of the acquired enterprise is not up to expectations,and the initial recognition amount of goodwill is inflated.Fourth,the main problems existing in the goodwill accounting treatment of the case company are that the judgment of goodwill impairment signs is not in place,the division and valuation of asset groups are not reasonable,and the disclosure of goodwill impairment related information is not sufficient.Fifth,through the simulation of different subsequent measurement methods of goodwill,it is found that these methods also have their own advantages and disadvantages.To improve the existing accounting treatment criteria of goodwill,we should pay more attention to the reasonable evaluation of asset value,standardize the goodwill accounting treatment procedures,and improve the supervision of the disclosure of goodwill information.