HOW Much? $5.6 Trillion? XBRL Data Supports Goodwill Debate
A new CFA Institute comment letter demonstrates the value of using structured data to inform debate and underpin policy decisions.
US standard setter the FASB is weighing up alternatives to existing accounting treatments for Goodwill. It’s a thorny issue, currently undergoing review by FASB (and IASB). FASB is weighing up whether to continue to assess goodwill by annual evaluations, or whether to return to the prior approach, where a set portion of goodwill was written down each year.
CFA Institute argues that FASB has not properly considered the magnitude of this change. Using data from Calcbench (an innovative data provider that makes extensive use of SEC XBRL filings), CFA Institute was able to demonstrate that reverting to an amortization approach regarding goodwill would wipe out 45% of the equity of companies in the S&P500, and in total, reduce profits and assets by $5.6 trillion over a 10-year period.
Data-backed arguments such as this are persuasive, and the widespread use of XBRL tagging today makes drawing on this data relatively straightforward. Hopefully, examples like this will encourage more policymakers around the world to use more and more XBRL data as part of their own analysis.