ACC 411 Lecture Notes - Lecture 15: List Of Fasb Pronouncements, Intangible Asset, Net Income
7 May 2015
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Document Summary
There are many findings of the article regarding goodwill impairment. For instance, companies involved in many m&a transactions actually have lower goodwill write-offs than companies with fewer acquisitions, and impairment is recognized four to five years after acquisition, on average. Also, the likelihood of a write-off can be predicted to some degree. For example, impairment is more likely when the acquisition results in large goodwill, the goodwill is a large portion of the acquisition, and stock is the primary form of payment. Furthermore, the likelihood of impairment increases if the segment-level roa is low. Regarding the timing of these write-offs, the article finds that there is a significant delay between when the impairment is recognized and when the deterioration in performance actually occurred. It is also noticed that new management is more inclined to write-off the goodwill accumulated by their predecessors.
