IFRS 3 has introduced a new concept into accounting for purchased goodwill – annual impairment testing, rather than amortisation. Consider the effect of a change from amortisation of goodwill

(in IAS 22) to impairment testing and no amortisation in IFRS 3, and in particular:

● the effect on the financial statements;

● the effect on financial performance ratios;

● the effect on the annual impairment or amortisation charge and its timing;

● which method gives the fairest charge over time for the value of the goodwill when a business is acquired;
● whether impairment testing with no amortisation complies with the IASC’s Framework for the Preparation and Presentation of Financial Statements;
● why there has been a change from amortisation to impairment testing – is this pandering to pressure from the US FASB and/or listed companies?