ABCC-2023-006: “Medinex: Business Combinations, Goodwill and Goodwill Impairment”

Category: Accounting

Abstract: This case is used to demonstrate the acquisition method in the accounting for business combinations using the SGX-listed firm Medinex, which made three acquisitions in 2019. These were reported in its FY 2020 annual report. 

Medinex’s expansion-through-acquisition strategy resulted in Medinex reporting high goodwill amount. The Securities Investors Association (Singapore) (SIAS) had raised queries regarding Medinex’s acquisitions and the possibility of overpayment due to aggressive assumptions used in their valuations.

How valid were SIAS’s concerns about aggressive assumptions and overpayment? If goodwill was a significant element of each acquisition, were there enough disclosures for shareholders to understand what the goodwill represented?

ABCC-2023-006: Medinex: Business Combinations, Goodwill and Goodwill Impairment