Background: In July 2002 the Council of the European Union decided to adopt the Inter-national Accounting standards for listed groups, from the beginning of 2005. The goal with the implementation of IAS was to create one comprehensive set of high quality standards that was standing for reliability and comparability. IFRS 3 – Business combinations was published in March 2004 by IASB, at the same time IAS 36 and 38 were revised. One of the purposes with IFRS 3 was to create standards more similar to the US standards, ena-bling a global market with fair rules equal for every company acquiring another firm. Goodwill is no longer written-off, instead an annual impairment test is conducted to de-termine if write-downs are required.

Problem: IFRS 3 was predicted to be the standard having the greatest affect on the result. The findings in earlier studies and the fact that Mid Cap companies was seen as facing the greatest challenges due to their complex structure and limited resources, led to the decision of investigating how Mid Cap companies deal with requirements under IFRS 3 when ac-counting for goodwill. Aspects of negative goodwill will not be taken into considerations. The purpose of this thesis is to perform a “before and after” study on how IFRS 3 is af-fecting accounting for goodwill. This will be done by analysing annual reports for all com-panies listed on Mid Cap.

Method: In this thesis financial reports from all companies that are listed on the Swedish Mid Cap list will be analysed using a quantitative research method. Since companies move between the different lists depending on change in its market value the authors decided that the sample would contain the companies that were listed on Mid Cap at closing time November 10th 2006.

Conclusions: From this study it is found that only 20.45 % conducted write-downs in 2005 of all companies accounting for goodwill on the Mid Cap list. The result also shows that the goodwill item stands for the greatest portion of the intangible assets. For compa-nies performing write-downs in 2005, it was found that they all had a goodwill to total in-tangible assets ratio of at least 60 %. The greatest part of the companies not conducting write-downs were relatively small in their size and have less than 2000 employees. It was also deduced from the study that the companies that made the greatest write-downs had the lowest net incomes and vice versa.