Goodwill - Revision history

Quidam65 at 15:43, July 26, 2022

2022-07-26T15:43:52Z

2018-03-02T02:10:15Z

2018-02-24T15:23:38Z

2018-02-24T03:19:26Z

2018-02-24T03:15:34Z

remove section on similarly-named charitable organization (new article created for it)

2016-07-12T02:11:34Z

top: clean up & uniformity

2009-05-30T21:41:30Z

2008-10-27T21:33:44Z

2008-03-06T20:23:01Z

2007-09-17T20:59:58Z

undeadend

← Older revision		Revision as of 15:43, July 26, 2022
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	Management must review the asset value of goodwill every year to determine if it has been "impaired". If it is determined that the goodwill has been impaired, it must be reduced or, in some cases, completely written off. An impairment may occur for any reason; for example, a company purchases another company which has several government contracts, but later the purchased company fails to win the contract renewals and has difficulty winning new business.		Management must review the asset value of goodwill every year to determine if it has been "impaired". If it is determined that the goodwill has been impaired, it must be reduced or, in some cases, completely written off. An impairment may occur for any reason; for example, a company purchases another company which has several government contracts, but later the purchased company fails to win the contract renewals and has difficulty winning new business.

−	[[Category:Accounting]]	+	[[Category:Accounting Terms]]

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 In accounting, '''goodwill''' represents the purchase price of a business over the underlying fair value of its acquired assets.
-For example if a buyer paid $2 million for a company whose net assets where only worth $1.3 million, the $700 thousand difference would be treated as goodwill.
+For example, a buyer paid $2 million for a company whose net assets where only worth $1.3 million; the $700 thousand difference is treated as goodwill.
-Management must review the asset value of goodwill every year to determine if it has been "impaired".  An impairment may occur for any reason; for example, a company purchases another company which has several government contracts, but later the purchased company does not win the contract renewals.  If it is determined that the goodwill has been impaired, it must be reduced or, in some cases, completely written off.
+Management must review the asset value of goodwill every year to determine if it has been "impaired".  If it is determined that the goodwill has been impaired, it must be reduced or, in some cases, completely written off.  An impairment may occur for any reason; for example, a company purchases another company which has several government contracts, but later the purchased company fails to win the contract renewals and has difficulty winning new business.
 [[Category:Accounting]]

← Older revision		Revision as of 15:23, February 24, 2018
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		+	''For the charitable organization known for its chain of thrift stores, see [[Goodwill Industries]].''
		+
	In accounting, '''goodwill''' represents the purchase price of a business over the underlying fair value of its acquired assets.		In accounting, '''goodwill''' represents the purchase price of a business over the underlying fair value of its acquired assets.

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-'''Goodwill''' can have a number of meanings but this brief article contemplates its meaning as a financial asset.
+In accounting, '''goodwill''' represents the purchase price of a business over the underlying fair value of its acquired assets.
-Goodwill that appears on a balance sheet is always 'purchased' goodwill.  That is, it is not generated by some mechanism internal to the company and then created as an asset.
+For example if a buyer paid $2 million for a company whose net assets where only worth $1.3 million, the $700 thousand difference would be treated as goodwill.
-Goodwill normally arises from the purchase of a business where the price paid exceeds the fair value of the net assets acquired.  Consider the purchase of an extremely profitable business that had a very low asset base.  If the buyer paid, say, $2 million for a company whose net assets where only worth $1.3 million, the $700 thousand difference would be treated as goodwill.
+Management must review the asset value of goodwill every year to determine if it has been "impaired".  An impairment may occur for any reason; for example, a company purchases another company which has several government contracts, but later the purchased company does not win the contract renewals.  If it is determined that the goodwill has been impaired, it must be reduced or, in some cases, completely written off.
 [[Category:Economics]]
 [[Category:Finance]]
 [[Category:Accounting]]

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 Management must review the asset value of goodwill every year to determine if it is still a legitimate asset.  If it is not, the asset must either be reduced or written off completely.  Reverting to the previous example, suppose the business purchased had a competitor that opened a location just across the street, and that ongoing [[profit]]s would be reduced.  Management would be required to reduce, if not write off completely, the value of g.
 [[Category:Economics]]
 [[Category:Finance]]
 [[Category:Accounting]]

@@ Line 11: / Line 11: @@
 '''Goodwill Ministries''' is a charitable organization that assists the less fortunate, similar to the larger [[Salvation Army]].  Goodwill runs a number of thrift stores.
-[[category:economics]]
+[[Category:Economics]]
-[[category:finance]]
+[[Category:Finance]]
-[[Category:accounting]]
+[[Category:Accounting]]
 [[Category:Charity]]

← Older revision		Revision as of 20:23, March 6, 2008
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−	Goodwill can have a number of meanings but this brief article contemplates it's meaning as a financial asset.	+	'''Goodwill''' can have a number of meanings but this brief article contemplates it's meaning as a financial asset.

	Goodwill that appears on a balance sheet is always 'purchased' Goodwill. That is, it is not generated by some mechanism internal to the company and then created as an asset.		Goodwill that appears on a balance sheet is always 'purchased' Goodwill. That is, it is not generated by some mechanism internal to the company and then created as an asset.

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 On a strictly theoretical basis, Goodwill is the present value of the superior earnings stream of a business, capitalized in perpetuity.  Put another way, you would only pay $2 million for a business with assets of $1.3 million if you thought you would make a lot more money than that sort of investment would normally generate.
-Management must review the asset value of Goodwill every year to determine if it is still a legitimate asset.  If it is not, the asset must either be reduced or written off completely.  Reverting to the previous example, suppose the business purchased had a competitor that opened a location just across the street, and that ongoing profits would be reduced.  Management would be required to reduce, if not write off completely, the value of Goodwill.
+Management must review the asset value of Goodwill every year to determine if it is still a legitimate asset.  If it is not, the asset must either be reduced or written off completely.  Reverting to the previous example, suppose the business purchased had a competitor that opened a location just across the street, and that ongoing [[profit]]s would be reduced.  Management would be required to reduce, if not write off completely, the value of Goodwill.
 [[category:economics]]
 [[category:finance]]
 [[Category:accounting]]