A NOTE ON THE INVERSE (REVERSE) SUM-OF-THE-YEARS’-DIGITS METHOD AND OTHER WAYS TO AMORTISE GOODWILL
Australian accounting standard ASRB 1013 Accounting for Goodwill was issued in 1988 and applied to financial years ending after 18 June that year. It required purchased goodwill to be capitalised at acquisition (clause .34) and then “systematically amortised” over not more than twenty years (clause .35) in a manner that “reflect(s) the amount and timing of expected future benefits” (clause .37). ASRB 1013 was replaced by the current standard, AASB 1013. Clause .35 of AASB 1013 says that goodwill “shall be systematically amortised … over the period of time during which the benefits are expected to arise” up to a twenty-year ...
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