An Empirical Evaluation Of Goodwill Accounting

Abstract

While the current amortization period for goodwill is criticized by many financial statement preparers for being too short, the accounting profession and regulatory bodies indicate the intention of further reducing the amortization period. This study documents consistent evidence suggesting that any attempt to significantly shorten the amortization period may impose an unfair penalty on firms with goodwill assets and cause the reported goodwill to be significantly understated.