Amortization of goodwill

Here is an example of goodwill: On 1 July 2016, Company A acquired Company Z with assets at a fair value of THB 1,500,000 million and liabilities totalling THB 850,000. Therefore, goodwill of THB 650,000 arose at the date of acquisition.

Keywords: Mazars, Thailand, Accounting, Goodwill, TFRS, PAEs, NPAEs

09 December 2016

How is goodwill amortized?

The Thai Financial Reporting Standards for Publicly Accountable Entities (TFRS of PAEs) indicate that goodwill is initially recognized at cost and subsequently stated at cost less accumulated impairment losses, if any. Goodwill is not amortized, but is tested for impairment on an annual basis.

Therefore, if the financial statements of Company A are prepared in accordance with TFRS for PAEs, there is no requirement to amortize goodwill.

Paragraph 188 of the Thai Financial Reporting Standards for Non-Publicly Accountable Entities requires an entity to amortize over 10 years intangible assets which have an indefinite useful life.

Thus, Company A must calculate and amortize goodwill on a straight-line basis for 10 years, which equals THB 65,000 a year.