Evolution of approaches to understanding the economic substance, assessment and recognition of goodwill in financial reporting: pre-regulatory stage (1571-1929)
The article discusses the origin and development of views on the economic substance of goodwill, its assessment at the stage of planning mergers and acquisitions. In addition, the article addresses goodwill recognition in financial statements of acquiring company and subsequent accounting. The author identifies three stages of this evolution: (1) Pre-regulatory (1571-1929); (2) Regulatory (1929-1960s of the 20 <sup>th</sup> century); (3) Harmonic (1970s of the 20 <sup>th</sup> century till present). In this article the author considers the Pre-regulatory stage. The characteristic of this stage is the origin of the “goodwill” concept and scholarly disputes about its economic nature in the conditions of weak regulation of goodwill recognition and measurement in accounting standards. The author has studied a great number of source publications and found out that the earliest mention of goodwill in legal texts and literary works (1571, 1766, 1786, and 1863) belongs to P.D. Leake in 1921. The author points out that the majority of researchers (from the twentieth century to modern times) of the history of views on the goodwill evolution refer to the Leake’s works. The article contains a full bibliographic description of the sources quoted by Leake and the photographs of original texts of these sources; some quotes are more complete and the author provides personal comments on them. The article also includes the description and analysis of views of the most famous researchers of goodwill from the late 19 <sup>th</sup> to the early 20 <sup>th</sup> century, such as W. Harris, F. More, G.E.S Whatley, L.R. Dicksee, J. Charpentier, H.R. Hatfield, P. Magnin, J.F. Schär, E. Schmalenbach, P.D. Leake, W.A. Paton, F.W. Pixley, J.M. Yang, A.F. Saunders and others. The author specifies that during this period there was a broad diversity of opinions on the nature, valuation and accounting treatment of goodwill. The article can be useful for those interested in the history of goodwill concept development, in the history of accounting and economic analysis.