In this study we provide a detailed assessment of the financial reporting related to business combinations (i.e. acquisitions) and impairment testing of assets, in particular goodwill, provided by leading stock-listed European companies in their year-2009 IFRS consolidated financial statements. The respective standards – IFRS 3 “Business Combinations” and IAS 36 “Impairment of Assets” – are controversial. When the International Accounting Standards Board (IASB) introduced them in 2004 far-reaching changes were brought about. In particular, the acquisition method, the only method allowed to account for acquisitions, involves the measurement at fair values of all assets, liabilities and contingent liabilities of the acquired entity at the acquisition date. Goodwill from acquired companies is not amortised anymore on a regular basis. Instead companies must perform a goodwill impairment test at least annually, which is time consuming, complex and requires specific valuation expertise. Furthermore, the IFRSs require companies to disclose extensive and very detailed information in the notes to their financial statements.1 The IASB claims that the new accounting rules, including the disclosure requirements, will improve transparency and will allow investors to better assess the financial consequences of acquisitions and, thereby, the quality of the company’s management. Critics, however, point to the complexity of the IFRS rules for business combinations and impairment testing of goodwill, and to the high costs of implementing and applying them. The widespread use of fair values is also contentious; it is argued that fair value estimates are highly subjective and open to manipulation when liquid markets do not exist for the assets and liabilities in question. Similar criticisms are brought forward against the “impairment-only approach” pertaining to goodwill. It is argued that the goodwill impairment test relies on subjective estimations and forecasts and is thus hard to verify by the auditors. Finally, doubts are raised about the usefulness of the extensive footnote disclosures.