Accounting for goodwill A case analysis of the U.S., U.K. and Japan

This paper discusses the international differences in accounting for goodwill, for financial reporting, and tax purposes. Financial publications have often discussed a bidding disadvantage that the U.S. face, because it must amortize goodwill, whereas British firms may write off goodwill directly to...

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Journal Title: Journal of International Accounting, Auditing and Taxation Vol. 1; no. 2; pp. 191 - 207
Authors: T.P. Rollins, K.M. Dunne
Format: Article
Published: 1992
Summary: This paper discusses the international differences in accounting for goodwill, for financial reporting, and tax purposes. Financial publications have often discussed a bidding disadvantage that the U.S. face, because it must amortize goodwill, whereas British firms may write off goodwill directly to stockholders' equity. The effect of these differences on acquisitions is investigated within the specific environments of the United States, Great Britain, and Japan. Using a case analysis, the paper demonstrates that the different financial reporting rules should not put U.S. firms at a disadvantage. However, Japanese firms may have a bidding advantage over the other two countries.
ISSN: 1061-9518