The methodology of information disclosure on internally generated goodwill of a company (assessing the synergetic effect of business) in financial statements
Ivanov A.E.South Ural State University (National Research University), Chelyabinsk, Russian Federation ivanov.chel@list.ru
Subject The article considers the existing methodology of information disclosure on the value of internally generated goodwill in financial statements of companies, and offers a unique methodological approach to such a disclosure. Objectives The purpose of the article is to describe the modern methodology of information disclosure on the value of internally generated goodwill in financial statements of companies, the history and background of the methodology formation, and the possibilities of its improvement within the existing legal framework. Methods Based on the academic literature, I considered the genesis of information disclosure on the internally generated goodwill in financial statements and revealed the basis for the existing methodology on the subject. Results I studied modern approaches of thirty countries of Europe, Asia, Northern and Southern America to national standards on information disclosure on the value of internally generated goodwill in financial statements. I have found out that today the leading world powers do not recognize it in financial statements of companies, hence, other less developed countries do not recognize it either, as their national accounting standards are, as a rule, written on the basis of IFRS, where such recognition is forbidden. I emphasize that the information is important, as it characterizes the abilities of companies to realize the synergetic effects that are inherent in any company, irrespective of the stage of its functioning. I offer a unique methodological approach based on the consideration of internally generated goodwill as a contingent asset. The company should disclose the nature and estimated value of the asset in the notes to financial statements, if there is a probability to receive economic benefits from the asset. Conclusions and Relevance The offered unique methodological approach may be useful for preparing financial statements, both under international and national standards.
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