Från Goodwill till Impairment test : Hur görs fördelningen till de kassagenererande enheterna
Abstract (Summary)From January 1st 2005 all companies that are noted on the stock exchange must follow the accounting rules laid down by the IFRS. This means, among other things, that amortization of goodwill will no longer be permitted. Instead, goodwill must be subject to an annual test for impairment of value. However, before the company is able to do this write-down test, goodwill must have been divided on the cash generating units that the company is expecting to attain beneficially from the acquisition. After that the goodwill will be valued by using a valuation model. The biggest problem posed by the new goodwill rule to companies, is how they can discern different cash generating units.The purpose of this paper is to gain an understanding of the complexity that has arisen for companies with the work process involved with cash generating units. The problems that this paper intends to address are; How has the company organized the working process with the cash generating units, from the start-point of a goodwill post coming up, to when it has been divided over different cash generating units, and finally when its being tested for write-downs? and what are the companies opinions about the new goodwill rules?To be able to answer the problems put forward by this paper, five interviews were done with companies noted on the O-list, Attract 40 on the stock exchange in Stockholm. A clear pattern emerged which could be understood from the result of which a typeprocess came out to illustrate the companies working process with the cash generating units. Simply put, the working process is as follows: An acquisition is made, goodwill follows and is then divided on one cash generating units. After that a valuation model and discount rate are decided, and finally the write-down tests are carried out.The companies opinions about the new goodwill rules differed. Three of the companies were of the opinion that the new goodwill rules have not contributed to a truer, fairer, and simpler system of comparison between companies, while two of them believe that it has.The paper came to two conclusions. Firstly that the actual working process looks the same in all of the companies. Secondly, that the new goodwill rules are having a mixed reception. Observe that no final or definite conclusions could be drawn when the paper only analysed the interviews of five different companies.
Source Type:Master's Thesis
Date of Publication:06/13/2006