How do you amortize goodwill?
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.
Comments
8 Responses to “How do you amortize goodwill?”
Leave a Reply
 | Free updates with your feed reader (or) receive our monthly Q&A newsletter by filling out the form below: |
Accounting Cheat Sheet
Receive our popular 15-page Cheat Sheet at no cost when
you join our free newsletter:
|
We keep your email address 100% safe and secure.
Most Recent Questions
- What is the meaning of sundry and sundry debtors?
- If an accrual adjusting entry increases an expense and a liability, how does the balance sheet remain in balance?
- What is the difference between liquidity and liquidation?
- What is the meaning of pro rata?
- What is the difference between financial accounting and management accounting?
- What is the difference between accounts payable and accounts receivable?
- In a bank reconciliation, what happens to the outstanding checks of the previous month?
Questions by Category
- Debits and Credits
- Depreciation
- Financial Accounting
- Financial Ratios
- Improving Profits
- Income Statement
- Inventory and Cost of Goods Sold
- Lower of Cost or Market
- Manufacturing Overhead
- Nonmanufacturing Overhead
- Payroll Accounting
- Present Value of a Single Amount
- Present Value of an Ordinary Annuity
- Standard Costing
- Stockholders' Equity
Why AccountingCoach.com?
AccountingCoach.com is designed to help people without an accounting background easily understand accounting concepts at no cost.
By investing thousands of hours, we have created clear and concise accounting information for both business people and students of all ages.
Read 1,200+ Visitor Testimonials
thank you sir i have received some accounting questions
Good reply, I might say. Here’s another question, how do you account for goodwill for a company that was incorporated two years ago given its paid up share capital as at March 2008 is 14 million?
Harold,
Greetings,
Could you please explain me the term “Goodwill Impairment” and also its reporting on the financial statements?
As per cost principle we show the assets at their historical cost less any accumulated depreciation on the balance sheet. My question is at the time of selling business how the acquiring company calculates the FMV value?
Thanks,
Karimulla.
sir will u kindly send me the answer of this question,
IS THE BAD REPUTATION OF A BUSINESS IS ITS GOOD WILL??
Harold,
Greetings,
I am Liberian I did my minor in accounting from the university of Liberia and hoping to do my BBA if i am given the financial assistance.
It was just today that i came across your website which really enjoy reading your article in this field.
Thanks for your asistance.
Yes, bad reputation is consider good will. Good will are intangitable assets they are patients, logo etc
Doing Jornal entry for Goodwill Impairment, can anyone help, I know you debit Loss for Impairment but not sure what to credit because there is no Accumulated Amortization? Help please….
The offset to the Loss for Impairment debit entry is a credit entry to Goodwill for the same amount. Instead of having a contra account, impairments of goodwill are entered directly to Goodwill as the offswet.