Disclosure Quality of Goodwill Impairment Testing: A Disclosure Index

Journal of Economics and Development, Vol 14, Iss. 1, pp. 5-30

27 Pages Posted: 30 Jul 2012 Last revised: 26 Sep 2013

See all articles by Khairil Faizal Khairi

Khairil Faizal Khairi

Universiti Sains Islam Malaysia (USIM), Malaysia

Nur Hidayah Laili

Macquarie Graduate School of Management

Dung Manh Tran

(NEU) National Economics University of Vietnam

Date Written: July 29, 2012

Abstract

This study sets out to offer proof of several important questions relating to the quality of information disclosed on goodwill impairment process under the new requirements of FRS 36. This study investigates the compliance level and disclosure quality of FRS 36 by top 20 of Singaporean listed firms in SGX at 2007 based on their market capitalization. In order to achieve the objective of this study, the weighted index is chosen because this index being able to differentiate the quality and importance of each mandatory disclosure under FRS 36.

The weighted index was developed by constructing disclosure scoring sheet, obtaining annual reports of 20 sampled Singapore firms for particular year, completing scoring sheet for each firms by assigned weighted for the disclosure items and calculating disclosure weighted index. The weighted index was analyzed to examine the firm’s compliance with the FRS 36 disclosure requirements. The results of this study revealed that 18 out of 20 (90%) firms in Singapore failed to comply with the most basic elements of the FRS 36 pertaining to goodwill impairment testing especially in allocating goodwill into the CGUs and key assumptions used in determining the recoverable amount of CGU assets.

Keywords: Impairment Testing, FRS 36, Weighted Index, Singapore

JEL Classification: M41

Suggested Citation

Khairi, Khairil Faizal and Laili, Nur Hidayah and Tran, Dung Manh, Disclosure Quality of Goodwill Impairment Testing: A Disclosure Index (July 29, 2012). Journal of Economics and Development, Vol 14, Iss. 1, pp. 5-30. Available at SSRN: https://ssrn.com/abstract=2119690

Khairil Faizal Khairi (Contact Author)

Universiti Sains Islam Malaysia (USIM), Malaysia ( email )

Bandar Baru Nilai
Nilai, Negeri Sembilan 71800
Malaysia
+6067986427 (Phone)

Nur Hidayah Laili

Macquarie Graduate School of Management ( email )

99 Talavera Road
Sydney, NSW 2113
Australia

HOME PAGE: http://www.mq.edu.au

Dung Manh Tran

(NEU) National Economics University of Vietnam ( email )

Vietnam

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