Accounting for Goodwill
by OSCAR S. GELLEIN Partner, Executive Office
Presented before the North Carolina Association of Certified Public Accountants, Chapel Hill—October 1968
CHANGE has always been a part of the human condition. This is well known. What is not remembered and seldom acted upon is the accelerating
rate of this change. Acceleration of change is seen in our total environment, in science, in business, and therefore in accounting.
Three years ago it was said that the year 1910 marked the midpoint in man's scientific development. Today a better figure probably is 1915— in other words, the midpoint moved at least five years in three years. Half the energy consumed by man in the last 2,000 years has been consumed
since 1915. Half the minerals and metals ever lifted have been lifted since 1915. Twenty-five per cent of the people that ever lived are now living. Ninety per cent of the scientists that ever lived are now living. It is not hard to believe that ninety-five per cent of the public accountants that ever lived are now living.
We know that the rate of change in our environment continues to increase at an increasing rate, but we act as if we did not believe it. The human mind seems incapable of projecting along an upward bending curve. Instead it looks ahead, although up, on a straight-line basis. This means there is ever a gap between man's ability to solve problems and the problems that require solution.
Now what does all this have to do with by subject—accounting for goodwill? Really very little so far as I can tell. Recognition of accelerating
change has had a great deal to do with the advancement of accounting in connection with many phenomena of the day, such as with respect to new types of securities being offered these days by companies, and in connection with earnings per share, accounting for income taxes, pension costs, and the like.
But some of the problems to be dealt with in accounting for goodwill are as old as accounting: They have some of the same dimensions and the same color as those existing when all of us, even the oldest of us, took up our study of accounting. Moreover, the progress toward solution of the goodwill problems moves at a snail's pace.