The recent global financial crisis has had a significant impact on market capitalisation and profitability. However, despite the recently forecast economic recovery, there is still a question mark over whether the impact of the crisis has been reflected adequately in companies’ balance sheets. During the run up to the crisis (between 2005 and 2008), many companies went on an acquisition binge, racking up
Eur0.9 trillion of booked goodwill. However, the results of our European Goodwill Impairment Study 2010-2011 (the Study) surprisingly indicate that overall reported levels of goodwill have only been impaired by Eur0.1 trillion over the past two years, in spite of a market decline.

• Are the impacts of the current financial crisis adequately reflected in companies’ actual practices for recognising goodwill impairments?

• Is there a disconnect between the International Financial Reporting Standards accounting rules for goodwill impairment and companies’ actual practices for recognising these charges on their balance sheets?

• If a disconnect does exist, what is the underlying reason for it?

• Is the treatment of goodwill still fair?

The comprehensive results, segmented by industries, are presented in detail in our Study which can be downloaded with the following link, please click here.