Japan（FASF）has decided to keep its current accounting rule for goodwill. According to the business news, companies using Japanese accounting standards will continue to amortize goodwill every year. At the same time, they must also perform an annual impairment test.
Goodwill is created when a company buys another company for a price higher than the value of its identifiable assets and liabilities. This extra amount represents things such as brand value, customer relationships, technology, and future earning power. However, measuring the true value of goodwill after an acquisition is never easy.
There are different accounting approaches around the world. Under Japanese Generally Accepted Accounting Principles (Japanese GAAP), goodwill is amortized over a certain period. In addition, companies must check every year whether the goodwill has lost its value. If the value has fallen, they must recognize an impairment loss.
On the other hand, International Financial Reporting Standards (IFRS) do not require regular amortization. Instead, companies perform only an annual impairment test. As long as no impairment is recognized, the goodwill remains on the balance sheet without being reduced.
Supporters of IFRS argue that goodwill does not always lose its value over time. Therefore, they believe that regular amortization does not reflect economic reality. However, this approach also has a weakness. If a company delays recognizing a decline in goodwill, a very large impairment loss may appear all at once in a future year. Such a sudden loss can have a significant impact on reported profits and may surprise investors.
In my opinion, valuing goodwill is one of the most difficult tasks in accounting. It is often impossible to know exactly how much of the original goodwill still exists years after an acquisition. Management must make many assumptions about future cash flows, market conditions, and business performance. As a result, impairment testing alone depends heavily on management’s judgment.
For this reason, I believe the current Japanese approach is more balanced. Regular amortization gradually reduces the carrying amount of goodwill, while annual impairment testing provides an additional safeguard when the value falls more than expected. Combining these two methods helps reduce the risk of keeping goodwill at an unrealistically high value for too long.
Although accounting standards continue to evolve around the world, Japan’s decision suggests that reliability and prudence remain important principles in financial reporting.
【語注】
・goodwill：のれん
・amortize(amortization）：（特に無形資産などの）償却
（類）depreciation：（有形資産の）減価償却
・impairment test(loss)：減損テスト（減損損失）
・identifiable assets and liabilities：
識別可能資産・負債。買収対象会社が持つすべての資産・負債（識別可能資産・負債）は時価評価されるが、買収対価のうち資産・負債の時価（差額）を超える額がのれん（goodwill）となる。
・carrying amount：帳簿価額（簿価）。 簿価 ＝ 取得価額 － 償却額
【設例】
買収に際して100億円ののれんを計上したが、4年経過後の減損テストでのれんの価値はゼロと 判定された。なお、のれん償却の見積もり期間は5年とする。
☑ 日本基準の4年後の処理
➡ 減価償却費（1年目～4年目）：20億円（100億円÷５）、減損損失（残存簿価）：20億円
☑ IFRSにおける4年後の処理 ➡ 減損損失：100億円
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