Accounting Policy Choice for Negative Goodwill

  • Yukari TakahashiEmail author
Part of the Advances in Japanese Business and Economics book series (AJBE, volume 6)


The purpose of this study is to reveal the determinants of the amortization period of negative goodwill in order to determine whether the choice of amortization period reflects the management’s perception of the future outlook. The analysis results suggest that the management chooses a shorter amortization period when the case resulting in negative goodwill is relief-oriented and a longer amortization period when the transaction is under common control. This indicates that the choice of amortization period for negative goodwill may reflect the management’s perception of the duration in which the business combination will incur costs or loss and that systematic amortization—which was a requirement before the Accounting Standard for Business Combinations in Japan was revised—might have offered useful information on the future outlook of the company.


Accounting policy Amortization Bargain purchase Business combination Negative goodwill 


  1. Arikawa, Y., & Miyajima, H. (2007). M&A wa naze zouka shitanoka. In H. Miyajima (Ed.), Nihon no M&A (pp. 45–79). Tokyo: Toyokeizaishinpo-sha.Google Scholar
  2. Cattlett, G. R., & Olson, N. O. (1968). Accounting for goodwill. Accounting Research Study No.10. New York: American Institute of Certified Public Accountants.Google Scholar
  3. Comiskey, E. E., Clarke, J. E., & Mulford, C. W. (2010). Is negative goodwill valued by investors? Accounting Horizons, 24(3), 333–353.CrossRefGoogle Scholar
  4. Hall, S. C. (1993). Determinants of goodwill amortization period. Journal of Business Finance and Accounting, 20(4), 613–621.CrossRefGoogle Scholar
  5. Hendriksen, E. S. (1977). Accounting theory (3rd ed.). Homewood: Richard D. Irwin.Google Scholar
  6. Henning, S. L., & Shaw, W. H. (2003). Is the selection of the amortization period for goodwill a strategic choice? Review of Quantitative Finance Accounting, 20, 315–333.CrossRefGoogle Scholar
  7. Inoue, K., & Kato, H. (2006). M&A to kabuka. Tokyo: Toyokeizaishinpo-sha.Google Scholar
  8. Kawamoto, J. (2011). Noren wo meguru giron ni kansuru ichikousatsu. Sangyokeiri, 71(1), 55–64.Google Scholar
  9. Kobayashi, N. (2009). Noren no shoukyaku kikan ni kakaru keieisha no kaikeitetsuzuki sentaku ni kansuru jishobunseki. Zeikeitsushin, 64(3), 234–244.Google Scholar
  10. Kurokawa, Y. (1998). Renketsu kaikei. Tokyo: Shinsei-sha.Google Scholar
  11. Miyajima, H. (2007a). Zounka suru M&A wo ikani yomitokuka. In H. Miyajima (Ed.), Nihon no M&A (pp. 1–41). Tokyo: Toyokeizaishinpo-sha.Google Scholar
  12. Miyajima, H. (2007b). Nihon no M&A no kokusaitekitokucho to keizaiteki kinou wa nanika. In H. Miyajima (Ed.), Nihon no M&A (pp. 331–379). Tokyo: Toyokeizaishinpo-sha.Google Scholar
  13. Moville, W. D., & Petrie, A. G. (1989). Accounting for a bargain purchase in a business combination. Accounting Horizons, 3(3), 38–43.Google Scholar
  14. Nishiumi, S. (2006). Fu no noren no hasseigennin ni kansuru ichikousatsu (Study on generating factors of negative goodwill). Memoirs of Fukui University of Technology, 36, 53–62.Google Scholar
  15. Takeda, Y. (1982). Kigyo ketsugo kaikei no kenkyu. Tokyo: Hakuto Shobo.Google Scholar
  16. Umehara, H. (2000). Noren kaikei no riron to seido. Tokyo: Hakuto Shobo.Google Scholar
  17. Yamauchi, A. (2010). Noren no kaikei. Tokyo: Chuokeizai-sha.Google Scholar

Copyright information

© Springer Japan 2014

Authors and Affiliations

  1. 1.Graduate School of Social SciencesTokyo Metropolitan UniversityHachiojiJapan

Personalised recommendations