The Value Of Goodwill And Goodwill Essay

1650 Words7 Pages
“What is goodwill?” Based on the information on the internet, goodwill is defined as “the excess of purchase price over the fair market value of a company 's identifiable assets and liabilities.” Moreover, goodwill is reported as a non-current asset on the balance sheet. But the U.S companies are not required to amortize the record amount of goodwill since 2001. Because the value of goodwill is highly subjective, the accounting standard requires the goodwill to have impairment test at least once per year in order to determine the amount of goodwill. However, when reporting the goodwill in terms of valuation and impairment, there are some rules that people need to follow under the US GAAP. Moreover, there are also some similarities and differences regarding valuation and impairment of goodwill between US GAAP(Generally Accepted Accounting Principles) and IFRS(International Financial Reporting Standards). First of all, under US GAAP on ASC 805, the value of goodwill can be recognized initially by measuring any excess of the fair value of the acquired business over the fair value of the net identifiable assets acquired. According to the ASC 805-30-30-1 from the FASB website, it mentions that “The acquirer shall recognize goodwill as of the acquisition date, measured as the excess of (a) over (b): (a) The aggregate of the following: (1) The consideration transferred measured in accordance with this Section, which generally requires acquisition-date fair value
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