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What the Future of Goodwill Impairment Might Look Like

Tammy Whitehouse | February 25, 2014

Most financial reporting executives would agree that the best way to measure the value of an asset on the balance sheet is with the method that gives you the most precise answer.

Unless, apparently, the value you're trying to measure is goodwill.

In that particular corner of accounting, precision comes with a hefty pricetag. Now the Financial Accounting Standards Board is considering whether users of financial statements really want to continue to stomach that cost—and whether to implement drastic changes if the answer is “no.”

The problem with goodwill is that it's not an asset in the conventional sense; it's an intangible asset created when one company buys another. The price that Company A pays to purchase Company B is typically more than the sum of Company B's assets and liabilities, and that extra bit is classified as goodwill. “Once you... To get the full story, subscribe now.