Goodwill Impairment Analysis: GAAP, IFRS, and Corporate Practices

This report provides a detailed analysis of goodwill impairment, comparing and contrasting the Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). It explores the key differences in valuation methodologies and the challenges these differences pose for company management. The report examines the treatment of goodwill during and after various financial events, including mergers and acquisitions, transfers, and bankruptcies. It also investigates how companies balance goodwill in their financial statements, considering the specific requirements of GAAP and IFRS regarding balance sheets and income statements. Furthermore, the report includes case studies of companies like PwC and General Electric (GE), illustrating their approaches to managing goodwill impairment and navigating the complexities of accounting standards. The references include several research papers and studies that further support the analysis of goodwill impairment.

Goodwill Impairment
REPORT

Question 1:
 GAAP and IFRSF are
able to create the
disparities with the
goodwill that is
viewed at the
impaired level where
the United states and
the other countries
are able to handle the
varying applications of
the valuation
methodologies.

GAAP & IFRS
 The differences are challenging for the management of companies,
where US GAAP, IFRS and the other reporting frameworks need to be
addressed. The goodwill impairment treatment flow mainly from the
fundamental differences in the accounting approaches. IFRS is about
the conceptual basis for the accountants to follow the fair value and
asset recovering aspect.

Difference in
GAAP & IFRS
 US GAAP is about
dictating the goodwill
which is for the
impairment through
use of the fair value
tests with level of
impairment. The step 2
is for the analysis of
related asset values.
Here, FASB is for the
issuance of step zero
qualitative assessment
where the introduction
of principle based
approach is done under
US GAAP.

Differences
 IFRS is about how the investors are reacting to the inconsistent
financial information, where the company management need to
understand about the environment. The differences address effect and
the transaction. Here, IFRS is recently working with European nations
on the different values which are not in original accounting work.

Question 2: Goodwill during and
after financial events
 The goodwill impairment is for the earnings charged with company
records on the income statements. They are mainly for identifying the
asset that is associated to the goodwill. Here, there are no longer
demonstration of the financial results as many companies work on
acquiring other firms and then pay a price exceeding the fair value for
the identifiable asset and liabilities.

Goodwill during and after mergers &
acquisition
 The company is acquired with the target company
where the value arises when there are
acquisitions and the acquirer tend to purchase
target companies. The amount that has been paid
is for the target company over the book value
targets that accounts to the values of a goodwill.

Goodwill during and after transfers
 The goodwill requires to handle the assigner transfer with proper rights
that are related to the rights and the values related to the trademark.
They are authority for the transferee to control and handle the selling
or improvise the changes or the quality or structure. The specific
products are transferred with use of trademark for specific products and
services.

Goodwill during and after
bankruptcies
 They are considered for the goodwill industries of Toronto, Eastern,
Central Areas who have resigned with bankruptcy process moving for
the non-profitable group standards.

Question 3: companies balance
goodwill between GAAP and IFRS
differences.
 GAAP focus on the comparative financial statements which are
presented in different circumstances. The companies follow the SEC
Rules which require the balance sheets for the recent years where the
other statements need to cover the 3 year period which is ended on
balance sheet.
 IFRS is about the information which needs to be disclosed with respect
to the period that is for amounts for current financial statements.
There is a need to match the changes with GAAP allowing the changes in
shareholder equity to be presented in notes to financial statement.

Companies balance goodwill
 The layout for the balance sheet and the income statement of US GAPP
enhances the preparation with accordance to specific layout. Here, the
companies follow detailed requirements that are in regulation to SX
(Lessambo, 2018).
 The IFRS is not for the layout of balance sheet but holds minimum line
items.

Continuation
 The balance sheet is for the debt in GAAP that are considered covenant
violation as non-current, where the lender agreements are for waiving
the rights to demand repayment.
 In IFRS, the debt is mainly through the covenant violations that are set
current unless there are lender agreements which