Goodwill as an Accounting Object: Concept, Calculation Procedure and Disclosure Requirements

The article is devoted to the study of goodwill as an accounting object in the context of transactions for the acquisition of control, where one company becomes the parent and the other becomes a subsidiary, and financial statements are prepared for the group of companies. The relevance of the topic is driven by the growing share of goodwill and other intangible assets in the structure of business value, as well as by the complexity of its interpretation for users of financial statements. The paper examines the definition of goodwill under IFRS 3 Business Combinations and the Russian accounting standard FSBU 14/2022 Intangible Assets, and analyzes the reasons why internally generated goodwill is not recognized in accounting. Special attention is paid to the algorithm for calculating goodwill using the acquisition method: each component is sequentially broken down — consideration transferred, non controlling interest, and net identifiable assets. Numerical examples illustrate the calculations of full and proportionate goodwill, as well as the effect of revaluing assets to fair value on the final amount of goodwill. The final part of the article systematizes the key factors that motivate investors to pay a premium when acquiring a business, and provides recommendations for interpreting goodwill information disclosed in financial statements from the users’ perspective. It is concluded that goodwill is a complex composite item reflecting the expected future economic benefits from the combination, and that high quality disclosure of such information is critically important for making informed investment decisions.