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Business trends

M&A costs to rise under proposed change to global accounting

Asian and European companies face billions of dollars in goodwill amortization

Japan's SoftBank is among companies in Asia that would have to book larger costs for acquisitions under changes to international accounting rules now under consideration.
Japan's SoftBank is among companies in Asia that would have to book larger costs for acquisitions under changes to international accounting rules now under consideration.   © Reuters

TOKYO -- An international body that sets corporate accounting rules has formally begun deliberations on reinstating goodwill as a periodic cost, a change that would push down the earnings of companies engaging in massive buyouts.

Hans Hoogervorst, chairman of the International Accounting Standards Board, told Nikkei about the discussions taking place. This move is prompted by the spate of mergers and acquisitions in recent years, in which purchasing companies often leave themselves exposed to losses tied to goodwill. A resolution could come as early as 2021.

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