Goodwill impairment
An asset reported mainly as goodwill on the balance sheet may be worth much less than the value reported. In this case the good will is impaired and the company will likely have to take a write-down on this asset. This often happens when intellectual property such as software is acquired and a premium price is paid for it. Subsequently, if the software is not commercialized, the goodwill associated with it must be reduced - often to zero. |
Similar financial terms
GoodwillThe value of a business to a purchaser over and above its net asset value. It reflects the value of intangible assets like:
- reputation
- brand name
- good customer relations
- high employee morale
- other factors which improve the company's business.
Goodwill is normally given a value in a company's balance sheet, but is depreciated over a period of time.
