After a company purchases another, goodwill is assigned as an intangible asset, denoting the portion of the purchase price that is higher than the fair value of all assets minus any liabilities. When the carrying value of goodwill is larger than the current fair value of that goodwill, businesses must record a goodwill impairment charge. This is charged as an expense on a company’s income statement.
Under generally accepted accounting principles (GAAP), companies must evaluate goodwill once per year to record any impairments. However, businesses also conduct testing when an acquired company is underperforming expectations. Whatever the reason, Quist has detailed knowledge of ASC 350 – Goodwill and Other, and can help businesses evaluate goodwill to determine any impairments.
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