Goodwill Impairment – An Assessment of Disclosure Quality and Compliance Levels by Large Listed New Zealand Firms

27 Pages Posted: 10 Feb 2010 Last revised: 1 Mar 2010

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: February 9, 2010


The rise of IFRS has resulted in the introduction of fundamental changes to accounting and reporting regimes for goodwill. The impairment testing led approach to goodwill reporting required under IFRS results in a materially different approach to goodwill valuation for balance sheet purposes and to the nature and timing of the influence of goodwill as an asset class on the determination of periodic profit. Arguably, the transition to IFRS goodwill accounting and reporting also results in substantially increased complexity – both in terms of the techniques required of reporting entities in accounting for goodwill, and in the nature of disclosures required in relation to goodwill and its impairment. This suggests the possibility of inconsistent compliance and varying levels of disclosure quality by firms transitioning to reporting under the new regime. This paper reports on the findings of a study of the largest New Zealand listed firms making voluntary disclosure relating to goodwill impairment testing under IAS 36. The study finds that New Zealand firms apply more strictly with the requirements of IAS when compared to Australian firms, and New Zealand firms assume more conservative input assumptions regarding value in use modelling than Australian firms. These findings are of interest to researchers examining the implications of voluntary adoptions and for policy setters and regulators in jurisdiction that have adopted, or are on the pathway to adopting IFRS.

Keywords: Goodwill, Financial Reporting, Creative Accounting, Impairment Accounting, New Zealand

JEL Classification: M40, M41

Suggested Citation

Carlin, Tyrone M. and Finch, Nigel, Goodwill Impairment – An Assessment of Disclosure Quality and Compliance Levels by Large Listed New Zealand Firms (February 9, 2010). Available at SSRN: or

Tyrone M. Carlin

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 (Contact Author)

Saki Partners ( email )


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