Double Accounting for Goodwill: A Problem Redefined

by Martin Bloom
Routledge, 2008, 248 pp.

This book traces the history of the goodwill accounting controversy in detail. The book explores the problem of recognizing the importance of goodwill as a whole and finding a way of presenting meaningful information regarding it in the context of financial statements. The author is a senior partner in Deloitte’s corporate and forensic accounting practice in Sydney, Australia.

After more than 40 years of public practice, he decided to study accounting for goodwill in detail. He became convinced that the conventional accounting treatment of goodwill was unsound in theory and of little use in practice.

The author’s proposed solution builds upon his research, which formed the basis of a doctoral thesis at the University of Sydney. He proposes a market capitalization statement based on a modification of 19th century double-entry accounting that puts it in a modern context. Examples show that the proposed market capitalization statement has the potential to provide significant information not currently available from conventional financial statements, which in turn are freed to present clearer information.

The author readily admits that further research is needed beyond his own work. He contends, however, that accounting for goodwill and identifiable intangible assets is so important that it’s critical that the issues surrounding it be resolved.

By JofA Senior Editor Matthew G. Lamoreaux