Full Goodwill and Amortization of Goodwill as per IFRS

Goodwill amortization: The French Accounting Standards continue to require amortization of goodwill. This prudent practice is the equivalent of reducing the consolidated income and equity since year after year goodwill is disappearing accounts. This practice has the merit of simplicity but very imperfectly reflects economic reality.

Indeed, goodwill is not intended to be consumed by the effect of time but rather to increase the development of the activity. So the IFRS position seems more justified, however difficult the estimation of goodwill in connection with impairment makes it difficult accounting appreciation. Ultimately, the solution of the same depreciation if imperfect has the merit to limit questions to evaluating the simple duration of the depreciation.

"Full" goodwill

The concept of full goodwill was introduced by IFRS 3, this approach results from the changing nature granted to minority and vision of a group as one economic entity and not a single entity control. This method of assessing the minority interests at fair value and to assign a portion of the goodwill arising on the acquisition.

The application of the full goodwill method remains optional, the option formula to each grouping. Obviously, this method has today little adept. The exercise of reviewing post-implementation of IFRS 3, scheduled for 2013, will perhaps return to an accounting policy in line with what is best understood by the readers of the accounts.

As we see, the subject of business combinations accounting remains a very open subject, we expect that the rules aware of new developments in the coming years.