摘要：The use of fair value in financial reporting has been a critical issue for some time.In the last five years,after the boom phase of company takeovers,with the financial crisis spreading to the general economy,impairment testing for goodwill has taken center stage and has become a hot topic.This paper investigates and compares the disclosure level of the goodwill impairment testing process during 2007-2011 in the major listed companies in the UK.The authors review the annual reports of 85 non-financial firms,ranked by market capitalization and total assets,that were listed on the London Stock Exchange and recognized goodwill as an asset;then,they examine all the information provided by the companies about the estimation of the "recoverable amount” using a DCF model according to IAS 36;based on the financial information given in the annual reports during 2007-2011,the core valuation techniques has been divided as follows:(1) identification of cash generating units;(2) scenario analysis and forecast of free cash flows;(3) estimation of "terminal value”;(4) cost of capital and g-rate calculation;(5) sensitivity analysis.Evidence shows a lack of disclosure on the key assumptions of the estimation model required by IAS 36,especially after the world economic and financial crisis (2009-2011).The findings should be of interest to underline some questions related to both the effectiveness of goodwill impairment tests under uncertainty and disagreement in economic and financial forecasting and the value-relevance of the specific information given in the annual accounts of non-financial listed companies in the UK.
关键词：The use of fair value in financial reporting has been a critical issue for some time.In the last five years,after the boom phase of company takeovers,with the financial crisis spreading to the general economy,impairment testing for goodwill has taken center stage and has become a hot topic.This paper investigates and compares the disclosure level of the goodwill impairment testing process during 2007-2011 in the major listed companies in the UK.The authors review the annual reports of 85 non-financial firms,ranked by market capitalization and total assets,that were listed on the London Stock Exchange and recognized goodwill as an asset;then,they examine all the information provided by the companies about the estimation of the "recoverable amount” using a DCF model according to IAS 36;based on the financial information given in the annual reports during 2007-2011,the core valuation techniques has been divided as follows:(1) identification of cash generating units;(2) scenario analysis and forecast of free cash flows;(3) estimation of "terminal value”;(4) cost of capital and g-rate calculation;(5) sensitivity analysis.Evidence shows a lack of disclosure on the key assumptions of the estimation model required by IAS 36,especially after the world economic and financial crisis (2009-2011).The findings should be of interest to underline some questions related to both the effectiveness of goodwill impairment tests under uncertainty and disagreement in economic and financial forecasting and the value-relevance of the specific information given in the annual accounts of non-financial listed companies in the UK.
