IFRS Adoption in Australia: The Case of Reporting for Goodwill and Identifiable Intangible Assets

• In Event: Concurrent Session 1.2: IFRS

Abstract

This paper investigates the impact of Australian IFRS (AIFRS) adoption on the accounting for, and disclosure of, goodwill and identifiable intangible assets (IIA) using a sample of the top 250 Australian listed companies for 2000 and 2006. Based on positive accounting theory and previous studies under the Australian domestic accounting standard (AGAAP), we expect accounting for goodwill and IIA under AIFRS to be related to a firm’s prior leverage and future performance. We find evidence consistent with both expectations. The proportion of goodwill relative to IIA reverses under AIFRS with a larger weight on goodwill, likely in order to avoid future amortisation of IIA. Further, companies impair relatively less goodwill under AIFRS than they have amortised and impaired previously under AGAAP. Our study provides useful insights into the impact of managerial discretion when companies account for goodwill and IIA under AIFRS.

Authors

• Tami Dinh Thi, The University of New South Wales

• Helen Kang, The University of New South Wales

• Richard Morris, The University of New South Wales

• Wolfgang Schultze, Universität Augsburg