A Closer Look at Factors of Purchased Goodwill in Japan

By analyzing the factors of purchased goodwill under currently Japanese accounting principles, comparing them with those measured by previous accounting principles in Japan, International Accounting Standards (IAS), Financial Accounting Standards (FAS), the aims of this paper are not only to state that the comparability among companies related to factors of purchased goodwill may be lost but also to address that a gap between IAS, FAS and Japanese accounting principles related to this aspect of purchased goodwill is still rather far. In this paper, first, factors of purchased goodwill in dynamic, open systems are examined theoretically. Next, factors of purchased goodwill under current Japanese accounting principles are analyzed and compared them with those measured by IAS and FAS. Then, the practice in Japan is studied. Finally, some conclusions are made for the paper.