|Accounting for goodwill has been a topic of debate for the last century due to the
nature of goodwill and difficulties in valuing and presenting it into accounts. Its
importance has increased in the last years due to the emergence of the knowledge-
based economy and international reporting requirements for comparable, relevant and
reliable financial information.
The purpose of this study is to understand, describe, and explain the accounting
treatment of goodwill in Ireland since the 1970’s, following an interpretivist
The opinions on and accounting treatments of this subject have differed and changed
frequently. It was first deducted from the stockholders’ equity, and then capitalised
without/or with amortisation, and finally capitalised and tested for impairment
The literature review presents a comprehensive overview of the area of goodwill
accounting, describing how the methods of accounting for it have changed over the
years, identifying the strengths and weaknesses of the various approaches, and
comparing the standards applied to the area.
The primary research was carried out through a questionnaire (for analysing the
opinions of senior accountants of Irish listed companies on the international
accounting standards on goodwill) and interviews with two experts in financial
Proponents of IFRS 3 claim that this standard provides investors with transparent and
comparable information, while the critics argue that the impairment test is subjective,
leaves room for earnings’ management and is not much more accurate than the
amortisation method previously used.