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Goodwill and Impairment

About the project

Goodwill is an asset recognised on an acquirer’s balance sheet in a business combination when the consideration paid for an acquiree exceeds the fair value of the acquiree’s identifiable net assets. It is measured as a residual (the excess of the amount paid over the fair value of the identifiable net assets), and represents the future economic benefits arising from other assets acquired that are not individually identified and separately recognised. Goodwill is subsequently measured at historical cost and written down under the requirements of HKAS 36 Impairment of Assets in the event of impairment.


Following its Post-implementation Review of IFRS 3 Business Combinationsthe International Accounting Standards Board (IASB) began a research project on goodwill and impairment with the objective to explore whether entities can provide users of the financial statements with more useful information regarding acquisitions at a reasonable cost. The IASB is considering:


  • improving disclosures to allow investors to assess whether a business combination is a good investment decision and whether, post-acquisition, the business is performing as expected at the time of acquisition;
  • simplifying the accounting for goodwill; and
  • improving the calculation of value in use in the impairment test.

The IASB published its preliminary views in a Discussion Paper Business CombinationsDisclosures, Goodwill and Impairment in March 2020 to seek public comments. The Hong Kong Institute of Certified Public Accountants (Institute) responded to that Discussion Paper in December 2020 (see below for further details).


The Institute has an active goodwill and impairment project, and has carried out various activities to drive local and global discussions on the accounting for goodwill, including:


  • Working closely with other national standard-setters, including with the staff of the Accounting Standards Board of Japan (ASBJ) on a joint Research Paper Goodwill: Improvements to Subsequent Accounting and an Update of the Quantitative Study (details below).
  • Issuing an Invitation to Comment on the IASB Discussion Paper Business Combinations – Disclosures, Goodwill and Impairment, with comments due to be received by 7 August 2020.
  • Conducting various other forms of outreach to solicit views from stakeholders, including a forum with local investors and analysts and discussion at the International Forum of Accounting Standard Setters meeting in October 2019.

Research Paper

Staff of the Institute published a joint Research Paper with the staff of the ASBJ on 24 March 2020 with the objective to:


  • Share new findings from an updated quantitative study on goodwill.
  • Analyse the existing accounting requirements for goodwill.
  • Explore alternative views on the subsequent accounting for goodwill.


Please refer to Research Paper Goodwill: Improvements to Subsequent Accounting and an Update of the Quantitative Study for details.


The Institute presented its Research Paper to IASB members and national standard setters during Accounting Standards Advisory Forum (ASAF) meeting on 2 April 2020. 


Recent and upcoming activities 

A Plus articles 
Goodwill: improvements to subsequent accounting
Settling the Standard 


IASB submission
The Institute’s comment letter in response to the IASB DP/2020/1 was submitted on 23 December 2020. The submission, together with comment letters received and minutes for our outreach activities can be found at the Institute’s website.

IASB Board Meeting
The IASB staff provided the IASB with a high-level summary of the feedback on the Discussion Paper at the March 2021 IASB meeting. The IASB staff will provide the IASB with detailed feedback summaries on the IASB’s preliminary views at the April and May 2021 IASB meetings and plan to begin the redeliberation on the IASB’s preliminary views at the IASB meeting in June 2021.


Other useful resources

IASB Goodwill and Impairment project page

FASB Goodwill project page




Last updated: 7 April 2021