Regnskabsmæssig behandling af goodwill efter ÅRL og IFRS: Hvordan kan regnskabet påvirkes af forskellene mellem disse standarder, og hvilken giver det mest retvisende billede?

Christina Møller Eriksen

Student thesis: Master thesis


Goodwill acquired in business combinations has for many years been a much discussed topic. The increasing globalization affects that trading of businesses is a growing phenomenon.
This thesis deals with the issues connected to the accounting treatment of goodwill based on the Danish accounting law and IFRS. Based on theoretical and practical issues, I have analyzed the two laws concerning business combinations and the differences of the accounting treatment of goodwill between the two laws.
Goodwill is an immaterial asset and represents an additional charge for a selling company. The additional charge appears as the difference between cost of a business combination and the net fair value of the assets and liabilities. The goodwill can for example be caused by synergies or assets that are not included in the balance sheet.
In the last decades the accounting theories has developed from the transaction-based theory to the value-based theory. The value-based theory has its main focus on the fair value of the company and the balance sheet is the main feature in the annual report. The development to value-based theory can be the partly explanation why there in IFRS is a larger focus on the intangible assets and thereby on goodwill.
ÅRL and IFRS have different approaches for revaluation of goodwill, where ÅRL required annual depreciations and further adjustments if needed and IFRS requires impairment tests on a yearly basis and when needed. The annual depreciation after ÅRL can give an incorrect value due to lower value of the goodwill, than the asset is worth. In accordance with IFRS the goodwill can exist in the balance sheet forever based on the subjective judgments in the impairment test. This thesis will deal with an assessment of which of the standards that gives the most accurate picture of the treatment of goodwill.
ISS A/S is one of the companies in Denmark, which has recognized most goodwill as consequence of business combinations. The accounting treatment of goodwill is therefore essential for the ISS, as it represents a large account in their annual report. ISS follow the rules under IFRS where they annually perform an impairment test on goodwill. If ISS contrast followed ÅRL, where there must be systematic amortization over the lifetime of the goodwill, the effect would have been so great that it could be doubted whether the company would still be existence today. The amortization period of a maximum of 20 years after ÅRL has from 2016 been repealed. This would have resulted in a positive effect on equity if ISS followed the ÅRL. A conclusion of the thesis is that there are several dissimilarities between ÅRL and IFRS which can have a major effect on the annual report.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
Publication date2016
Number of pages90