Goodwill Allocation to Cash-Generating Units: IASB’s Amendments to IAS 36 and Empirical Insights from M&A Deals

The purpose of this thesis is to examine the IASB’s proposed amendments to IAS 36 Impairment of Assets, with particular attention to their conceptual and practical implications for the allocation of goodwill to cash-generating units (CGUs). The IASB has recently initiated a project to revise aspects of IAS 36 in response to ongoing challenges related to the recognition and measurement of goodwill impairment. These proposed amendments aim to enhance the transparency and consistency of impairment testing, particularly regarding how goodwill is allocated and monitored within reporting entities. The study begins with an overview of the current requirements of IAS 36, outlining the conceptual framework and methodological challenges associated with goodwill allocation. It then analyses the IASB’s proposed changes, assessing how they address existing limitations and their potential effects on financial reporting and decision-making. The final section conducts an empirical analysis of ten M&A transactions between 2022 and 2024 involving companies listed in the Euro Stoxx 50 index, examining their consolidation reports to evaluate how goodwill has been allocated under the current standard and how the proposed amendments could influence future reporting and impairment practices. The thesis concludes by formulating hypotheses based on the empirical findings, exploring potential outcomes of the proposed amendments once implemented. As the IASB project remains ongoing, the hypotheses developed in this thesis aim to provide preliminary insights into how the proposed amendments might influence future approaches to goodwill accounting and impairment testing.