Goodwill shows up on a company’s balance sheet when the company has been acquired in a merger or acquisition. It represents what’s left over after the purchase price is allocated to the company’s tangible assets, identifiable intangible assets and liabilities. Periodically, companies must test goodwill for “impairment.” Impairment happens when the carrying value of goodwill on the balance sheet has fallen below its fair value. This assessment can be complicated, and the rules vary somewhat between public and private entities. A valuation specialist can help you get it right.
