Goodwill

Code: 1234
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Account Information

Account Type Statement of Financial Position
Normal Balance Debit

Definition

Goodwill arising from acquisition of other companies

Common Journal Entries

Recorded goodwill on acquisition

Dr. Goodwill
Cr. Bank Account

Impairment test on goodwill

Dr. Impairment Loss
Cr. Goodwill

Full write-off of goodwill

Dr. Write-off Expense
Cr. Goodwill

Recorded negative goodwill

Dr. Net Assets Acquired
Cr. Negative Goodwill Income

International Accounting Standards

IFRS IFRS 3 Business Combinations

Not amortised. Tested for impairment annually at cash generating unit level.

US GAAP ASC 350 Intangibles - Goodwill and Other

Public companies: impairment only. Private companies may elect to amortise over 10 years.

⚠ Key Difference: IFRS vs GAAP

IFRS never amortises goodwill; GAAP allows amortisation for private companies