Regu­la­tion and Super­vi­sion at a glance

Good­will Accoun­ting under IFRS

The steadily increasing volume of M & A transactions has led to a massive build-up of goodwill positions in global corporate balance sheets. In order to curb abrupt value adjustments in economic downturns and the associated stability risks, the depreciation option should be reintroduced, the GDV argues.

Currently, goodwill positions in corporate balance sheets worldwide amount to a dizzying $ 7,000 billion. German companies have also been paying multi-billion euro premiums for M & A transactions in the recent past. Since the current IFRS regulations no longer provide for scheduled goodwill amortization since 2005, there is a risk of pro-cyclical effects in economic downturns if any omitted value adjustments are made up at once.
Therefore, GDV is in favor of reintroducing scheduled goodwill amortization to mitigate the potential threat to global financial stability due to the recognition of goodwill under IFRS.

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