Goodwill Impairment Testing Under IFRS - A False Impossible Shore?

34 Pages Posted: 25 Jul 2008

See all articles by Tyrone M. Carlin

Tyrone M. Carlin

Southern Cross University; The University of Sydney Business School

Nigel Finch

Saki Partners

Date Written: July 24, 2008


The transition to IFRS based reporting has resulted in fundamental departures from many of the long accepted norms embedded in indigenous GAAP systems now superseded in IFRS adopting jurisdictions. The rules relating to goodwill accounting, measurement and reporting represent an excellent case in point, the traditionally dominant capitalise and amortise regime having been disposed of in favour of an impairment testing regime pursuant to which periodic amortisation charges are no longer required. There has been much criticism of this new impairment testing regime, principally along the lines that it results in an increased potential for opportunism in financial statement preparation due to the subjective and unverifiable nature of a range of judgements necessary to the execution of the impairment testing process. In this paper, we add to the extant literature's catalogue of concerns by documenting systematic non compliance with the disclosure requirements of AASB 136 - Impairment of Assets. We argue that a key problem resulting from this phenomenon is a decline in financial statement comparability. At the policy level, we raise questions as to the implications of the complexity of the IFRS based impairment testing regime both from the preparer and audit perspective.

Keywords: Goodwill, Impairment, Financial reporting, Creative accounting, Australia

JEL Classification: M41, M43, M44, M47, M49

Suggested Citation

Carlin, Tyrone M. and Finch, Nigel, Goodwill Impairment Testing Under IFRS - A False Impossible Shore? (July 24, 2008). Available at SSRN: or

Tyrone M. Carlin (Contact Author)

Southern Cross University ( email )

Lismore, New South Wales 2480

The University of Sydney Business School ( email )

Cnr. of Codrington and Rose Streets
Sydney, NSW 2006
+ 61 2 9036 7230 (Phone)
+61 2 9351 7471 (Fax)


Nigel Finch

Saki Partners ( email )


Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
PlumX Metrics