EFRAG publishes its final Comment Letter on Business Combinations – Disclosures, Goodwill & Impairment

EFRAG has published its final comment letter in response to the IASB's Discussion Paper DP 2020/1 Business Combinations – Disclosures, Goodwill and Impairment.

In the Comment Letter, EFRAG supports the objective to explore whether companies can, at a reasonable cost, provide investors with more useful information about acquisitions. However, EFRAG suggests that the IASB should further examine whether some of the disclosures should rather be included in the management commentary. Considering the commercially sensitive nature of some of the proposed disclosures, EFRAG observes that it may be necessary to introduce some flexibility in the disclosure requirements.

Regarding the point on proposed simplification of impairment test, EFRAG has expressed reservations about introducing an indicator-only approach in connection with impairment-only model. EFRAG acknowledges the conceptual and practical arguments for both the impairment only model and amortisation model. Considering that an accounting policy should only be changed if it would provide reliable and more relevant information, EFRAG suggests the IASB further explore improvements to existing impairment test and any cost and consequences of reintroducing amortisation.

The Comment Letter may be accessed here.