Title: Discount rate - how do Swedish companies handle IAS 36 at impairment testing of goodwill?
Subject/course: Independent thesis in business administration 15 credits
Author: Sara Karlsson & Åse Thorsen
Mentor: Gunnar Wramsby
Examiner: Urban Österlund
Keywords: Goodwill, impairment test, discount rate, IFRS, IAS 36 and IAS 38
Purpose: This thesis aims to explain how the selected companies reason about IAS 36 and how they reason about changes in the market.
Method: This thesis is based on a deductive approach. The thesis is mainly qualitative in which five interviews were conducted and facts from annual reports have been obtained. The thesis also has a quantitative part where the discount rates for the various companies were surveyed.
Theory: The theoretical framework is based on theories of goodwill, discount rate, accounting principles, goodwill impairment and goodwill impairment testing. The authors also look closely at internal problems in the acquisition, such as principal/agent theory.
Empiric: Empirical data were collected through four mail interviews and one telephone interview. The purpose of the interviews was to gain an insight into how the interview respondents reason about IAS 36. Furthermore, empirical evidence gathered from the annual reports of the companies was surveyed. Empirical data was based on a period of ten years. The companies that have been researched are Meda, Trelleborg, ICA Gruppen, Indutrade and Boliden.
Analysis: The analysis is based on comparisons between theory and empirics and between empirics and empirics.
Conclusion: The conclusion is based on the analysis that was composed. It is also a comparison of empirics with empirics. The thesis conclusion shows that companies generally follow IAS 36 guidelines well but lack in some areas. Furthermore, the conclusion shows that the grounds for the discount rate did not differ significantly between the companies investigated, nor over time.
2015. , 56 p.