Document Type : Original Research
Author
University of Kharazmi
Abstract
Goodwill in consolidated financial statements is one of the important and complex concepts in accounting that refers to the intangible value of a business. Goodwill plays a significant role in the valuation and financial reporting of companies. In consolidated financial statements, goodwill is recognized as the difference between the acquisition cost of a company and the fair value of the net identifiable assets and liabilities of that company. This review article provides a comprehensive examination of the concepts, methods, and challenges related to goodwill in consolidated financial statements based on International Financial Reporting Standards.
First, the fundamental concepts of goodwill and its importance in financial reporting are explained. Then, various methods of calculating goodwill, including the single-component and two-component approaches, are examined in detail. In this section, the advantages and disadvantages of each method, as well as their impact on the transparency and comparability of financial statements, are analyzed. Subsequently, the challenges and issues related to goodwill impairment and the manner of its reflection in consolidated financial statements are discussed. This section includes an examination of impairment assessment methods, their financial and reporting effects, and proposed solutions for managing these challenges.
The findings of this study indicate that the use of appropriate methods for the calculation and reporting of goodwill can help improve the transparency and comparability of consolidated financial statements. In addition, recommendations are presented for improving financial reporting standards in the area of goodwill. These recommendations include suggestions for enhancing goodwill measurement and reporting methods and increasing the transparency of financial information.
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