A number of alternatives for goodwill impairment test were suggested which includes; Amortization (return of old ways), parting from mandatory testing, improve the status quo, get rid of goodwill impairment testing or may be doing nothing at all can produce the desired results.
Behind the implementation of goodwill impairment test, there lies an underlying meaning of getting rid of the old amortization method which produced less or no results in the acknowledgement of for those using financial value. Secondly, the impairment approach should provide the users of financial value with helpful information. Another reason behind the implementation of goodwill impairment testing is that the test would be operational and will record a decrease in the value of goodwill (PWC, 2015).
This new approach of accounting the good will, however, can be questioned on several grounds. The approach whereas is an alternative for the old amortization method it does not ensure the accuracy, it is easier in amortization method to determine an accurate overview of the investment whereas it predicts the impacts of earning too (PWC, 2015).
Two potential impacts of an announcement of goodwill impairment on a company’s stock can be immediate impact of misleading news on the company’s stock and if timely information is not provided to the marketplace it can bring into question whether company’s internal controls are effective, which is an increasing concern of auditors and legislators (PWC, 2015).
Goodwill impairment is not just an only accounting exercise. Valuation is healthy forward looking exercise but impairment of goodwill often means that future is not as rosy as it seems to be. The goodwill impairment communicates about company’s management performance and about its final expectations regarding the financial status (DUET Group, 2014)
Duet Group has strategized their use of goodwill impairment testing, the testing is done on annual basis which provides the investors with the historical financial background of the company as well as with the current management situation and accounts of the company making it convenient for the investors to consider the Duet Group as their potential option for investing their shares in. Previewing the historical records of the Duet Group the company has a history of going through rapid success. The company’s financial chart sheet has shown progress over the years and it does not solely depend upon the goodwill impairment. A company’s value of assets on balance sheet can be affected by the fluctuating economic conditions.