In what way has IFRS 3 made accounting for goodwill open to manipulation by managers?
A) Requires goodwill to be treated as an expense on the income statement
B) Requires goodwill to be treated as a one-off gain in the income statement
C) Requires goodwill to be subject to an annual impairment review
D) Requires goodwill to be treated as an asset on the balance sheet and amortized

Question

Quizplus · Accepted Answer

IFRS 3 requires goodwill to be subject to an annual impairment review rather than being systematically amortized over time. This approach gives managers some discretion in determining the timing and amount of impairment, potentially allowing for manipulation of financial statements.

In What Way Has IFRS 3 Made Accounting for Goodwill