What is goodwill and goodwill impairment and why does it go with operating expenses?

Question

What is goodwill and goodwill impairment and why does it go with operating expenses?

In: Other

Answer 1

Goodwill is what is paid above the actual value to buy another company. So if a company’s assets are worth $10M but Acme Co buys it for $20M, they’ve provided goodwill.

Goodwill impairment involves the bought company’s value dipping where fair value goes below book value.

These are both operating expenses as buying a company is an operating expense.