Can you amortize goodwill?
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Oliver Davis
Works at the International Air Transport Association, Lives in Montreal, Canada.
Hello, I'm an expert in finance and accounting. Let's dive into your question about the amortization of goodwill.
In accordance with **International Financial Reporting Standards (IFRS)** and **Generally Accepted Accounting Principles (GAAP)**, goodwill is no longer amortized. Instead, it is subject to annual impairment testing. The rationale behind this is that goodwill represents the potential future economic benefits arising from assets acquired in a business combination that are not individually identified and separately recognized. These benefits are considered to have an indefinite life, which means they are not expected to be exhausted within a finite period.
However, if it is determined that goodwill has an identifiable and finite life, it should be amortized systematically over that life in accordance with the matching principle of accounting. This is a less common scenario and would depend on the specific facts and circumstances of the business combination.
In accordance with **International Financial Reporting Standards (IFRS)** and **Generally Accepted Accounting Principles (GAAP)**, goodwill is no longer amortized. Instead, it is subject to annual impairment testing. The rationale behind this is that goodwill represents the potential future economic benefits arising from assets acquired in a business combination that are not individually identified and separately recognized. These benefits are considered to have an indefinite life, which means they are not expected to be exhausted within a finite period.
However, if it is determined that goodwill has an identifiable and finite life, it should be amortized systematically over that life in accordance with the matching principle of accounting. This is a less common scenario and would depend on the specific facts and circumstances of the business combination.
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Works at the United Nations Office on Drugs and Crime, Lives in Vienna, Austria.
Per the Financial Accounting Standards Board (FASB) Statement 142, Accounting for Goodwill and Intangible Assets, goodwill is no longer permitted to be amortized. In accounting, goodwill is accrued when an entity pays more for an asset than its fair value based on the company's brand, client base or other factors.
2023-04-09 10:54:26
Lucas Evans
QuesHub.com delivers expert answers and knowledge to you.
Per the Financial Accounting Standards Board (FASB) Statement 142, Accounting for Goodwill and Intangible Assets, goodwill is no longer permitted to be amortized. In accounting, goodwill is accrued when an entity pays more for an asset than its fair value based on the company's brand, client base or other factors.
