The Influence of Accounting for Goodwill on the Bottom Line of Business Corporations
The Influence of Accounting for Goodwill on the Bottom Line of Business Corporations

Author(s): Jaroslav Sedláček, Filip Hampl, Elena Láncošová
Subject(s): Business Economy / Management, Transformation Period (1990 - 2010), Present Times (2010 - today), Accounting - Business Administration
Published by: Masarykova univerzita nakladatelství
Keywords: correlation; Czech Accounting Standards (CAS); goodwill; intangible assets; International Financial Reporting Standards (IFRS);
Summary/Abstract: The paper is dedicated to methods of accounting for goodwill and their relationship to the bottom line of business corporations. Methodically it is based on the comparison of Czech and international accounting rules. Empirical research is conducted on business companies operating in the Czech Republic in the period from 2007 to 2016. Differences and connections between intangible assets including goodwill and performance indicator represented by earnings before interests and taxes (EBIT) reported in accordance with the Czech Accounting Standards (CAS) and the International Financial Reporting Standards (IFRS) are examined. Particularly, Spearman’s correlation coefficient and F-test are used for hypothesis testing. It was identified a lagged relationship between EBIT and the index indicator of acquired intangible/tangible assets and concluded that approach of CAS and IFRS regarding revaluation of goodwill is not comparable in terms of variability and predictability.

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