Measurement of Non-controlling Interests and Goodwill Impairment: Evidence from the German Market

Alice Šrámková and David Procházka
Additional contact information
Alice Šrámková: Prague University of Economics and Business

Chapter Chapter 14 in Financial Markets and Corporate Reporting under Geopolitical Risks, 2024, pp 201-212 from Springer

Abstract: Abstract IFRS 3 provides two different methods for measuring non-controlling interests at the acquisition date. The existence of an accounting policy choice generally raises concerns about the comparability of financial statements. The objective of this paper is to examine the extent to which the two methods are applied and whether and how the initial measurement of goodwill affects subsequent impairment of goodwill. The sample consists of the annual reports of German listed companies for the period 2016 to 2020. First, the empirical evidence shows that fair value is rarely used by companies to measure non-controlling interests at the time of acquisition. Second, the results show that almost 70% of companies do not recognize any impairment losses during the period under study. Such practices may undermine the usefulness of financial statements from the perspective of equity investors and other users. These views are also reflected in calls for the reintroduction of goodwill amortization. In this context, the paper includes the analysis of the feedback on the Discussion Paper on Business Combinations–Disclosures, Goodwill and Impairment published by the IASB in 2020, as expressed by the European stakeholders.

Keywords: Goodwill; Non-controlling interests; Impairment; IFRS 3 (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-031-62998-3_14

Ordering information: This item can be ordered from
http://www.springer.com/9783031629983

DOI: 10.1007/978-3-031-62998-3_14

Access Statistics for this chapter

More chapters in Springer Proceedings in Business and Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().