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Saturday, Apr. 19, 2014

A goodwill impairment?? Huh?

Posted Wednesday, April 1, 2009, at 9:21 AM

I am going to show my ignorance here but what the heck is a "goodwill impairment"? The end result does not sound too goodwill to me so.......

Here is an example: "Macy's, Inc. today announced that it has recorded an estimated pre-tax goodwill impairment charge of approximately $5.4 billion ($5.1 billion after tax or $12.07 per diluted share) in 2008."


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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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Steve Mills and his wife have one daughter and live on a farm outside of Bell Buckle. They previously owned two coffee/ice cream shops, currently operate an internet sales company and teach classes, but his primary job involves the paper industry worldwide. Hobbies and interests lie in gardening, photography, recorded music and of course, their pets.