Prior to 2001, the U.S. accounting rules required goodwill to be amortized to expense over a period not to exceed 40 years. However, in June 2001 the Financial Accounting Standards Board issued its Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets. This accounting pronouncement ended the automatic amortization of goodwill to expense for U.S. financial reporting.

While goodwill is no longer amortized to expense in uniform increments, goodwill is to be measured annually to determine if there is an impairment loss.

To learn more about the current U.S. accounting for goodwill, go to the FASB’s free website www.FASB.org/st and scroll to Statement No. 142.

About the Author: Harold Averkamp (CPA) has worked as an accountant, consultant, and university accounting instructor for more than 25 years.

He is the creator of the AccountingCoach Pro which has been praised for its ability to simplify accounting in a way that anybody can understand.

Learn more about AccountingCoach Pro