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Bedford Ramblings
Steve Mills

A goodwill impairment?? Huh?

Posted Wednesday, April 1, 2009, at 9:21 AM
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  • I found this definition from investopedia.com and I still do not know what a "goodwill" is. Is it something I can buy at Walmart? You can test it according to the statement below. Litmus paper, chermicals?

    Impairment Defined

    As with most generally accepted accounting principles, the definition of "impairment" is in the eye of the beholder. The regulations are complex, but the fundamentals are relatively easy to understand. Under the new rules, all goodwill is to be assigned to the company's reporting units that are expected to benefit from that goodwill. Then the goodwill must be tested (at least annually) to determine if the recorded value of the goodwill is greater than the fair value. If the fair value is less than the carrying value, the goodwill is deemed "impaired" and must be charged off. This charge reduces the value of goodwill to the fair market value and represents a "mark-to-market" charge.

    -- Posted by stevemills on Wed, Apr 1, 2009, at 9:33 AM
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