Many companies carry "goodwill" on their balance sheet as an asset. As a result, like all assets, goodwill must be valued correctly on the company's balance sheet in order for it to provide accurate information to investors and to the public. When the 'carrying value' of goodwill (the value reported on the balance sheet) is less than the fair market value, the goodwill is "impaired" and its value must be reduced. Goodwill impairment testing is thus required annually by financial accounting standards in order to make sure the value of goodwill is accurately reported.
The issue of goodwill impairment came to the forefront following accounting scandals in the US in 2002, when new legislation was passed to make sure companies weren't overinflating the value of goodwill to make their troubled balance sheets look better. The new testing requirements made balance sheets more accurate, but many companies complained that the process of goodwill impairment testing was difficult. As such, in August of 2011, changes to the standard were announced to alter the process and make testing easier.
Mark S. Gottlieb recently wrote a white paper entitled, An Attorney's Guide to Goodwill Impairment Testing. This is a must read for all corporate and business law practitioners.
What attorneys will learn from this whitepaper:
1. What is Goodwill Impairment Testing?
2. Why is Goodwill Impairment Testing important?
3. How is Goodwill Impairment Testing performed?
4. Why are the Goodwill Impairment Testing requirements changing?
5. What changes are being made to Goodwill Impairment Testing?
To obtain a free copy of this whitepaper click here!