In the accounting literature, there is substantial scepticism towards the adoption of the impairment-only approach to goodwill and other assets with an indefinite useful life (e.g. Li & Sloan, 2017; Ramanna & Watts, 2012; Watts, 2003; Zhang & Zhang, 2017). The main argument for such scepticism is that managers will let their professional judgments at the acquisition date be affected by personal motives; and as a consequence, they may compromise future economic impairments.

Peter Frii & Mattias Hamberg (2021) What motives shape the initial accounting for goodwill under IFRS 3 in a setting dominated by controlling owners?, Accounting in Europe, 18:2, 218-248, DOI: 10.1080/17449480.2021.1912369

Required

Critically appraise the treatment of goodwill and impairment within the current IFRS3 Business Combinations and conclude how issues with this standard have led to poor quality accounting information as a consequence of the Covid-19 pandemic.