Goodwill under IFRS 3 Business Combinations is the difference between the aggregate of the fair value of consideration transferred, the amount of non-controlling interests at acquisition date, and the fair value of previously held equity interests and the net fair value of identifiable assets and liabilities. Goodwill has to be tested for impairment by companies and any impairment losses will have to be expensed off.

Required:

Using insights from the article, “Is Goodwill an Asset?” by L.T. Johnson and K.R. Petrone (Accounting Horizons, September 1998), advise companies on how they can minimize the risk of having to expense off huge impairment losses in future.