Goodwill is an intangible asset that is acquired when a company buys another

Goodwill is an intangible asset that is acquired when

This preview shows page 5 - 6 out of 6 pages.

Goodwill is an intangible asset that is acquired when a company buys another company; therefore, goodwill is recorded in a situation where the purchase price is higher than the net fair value of all intangible and tangible assets as well as liabilities assumed during the time of purchase. Therefore, as part of the overall valuation process goodwill impairment becomes highly important in the approximate estimation of a company’s actual value. Annual review of goodwill through impairment test enables the correct calculation of goodwill which reduces the risk of overvaluation or undervaluation of goodwill and subsequently the overall company value (Based on total assets). Goodwill is never revalued; therefore, an any impairment arising is treated as an expense in company income statement. Goodwill impairment is not proportionate or systematic which is why it cannot be apportioned annually[ CITATION ACC19 \l 1033 ]. This point explains the need for annual review and goodwill impairment testing.
Image of page 5
6 Goodwill Impairment in relation to Valuation 3. References (Academic and Cited) ACCA Global. (2019). Impairment of goodwill . (ACCA Global) Retrieved 2019, from - study-resources/strategic-business-reporting/technical-articles/impairment-goodwill.html BDO global. (2018). IFRS INTELLIGENCE. Retrieved 2019, from - Intelligence-IFRS-3-Business-Combinations-pdf.aspx Carlin, T. M. (2008). Goodwill Impairment Testing Under IFRS - A False Impossible Shore? SSRN Electronic Journal . Ernst and Young . (2010). Impairment Accounting -the basic of IAS 36 Impairment of Assets . Retrieved from Ernst and Young website : S_36_Impairment_of_Assets/$FILE/Impairment_accounting_IAS_36.pdf Kabir, H. (2017). The Association between Goodwill Impairment Loss and Goodwill Impairment Test-Related Disclosures in Australia. SSRN Electronic Journal .
Image of page 6

You've reached the end of your free preview.

Want to read all 6 pages?

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask ( soon) You can ask (will expire )
Answers in as fast as 15 minutes
A+ icon
Ask Expert Tutors