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Simple Steps of calculating Impairment Goodwill Loss

>> April 2, 2009

These days the accounting term “impairment goodwill loss” is becoming more important in world accounting and I have also received many queries from chartered accountants for explaining what is the meaning of impairment of goodwill loss and how to calculate goodwill impairment loss means what are basic steps about calculating it.

Dear , you know that the main aim of calculating goodwill is to provide some amount of reputation to businessman when he sell his business in market because it is different from tangible assets and it is the part of intangible assets . So special steps are taken for calculating in calculation of Goodwill, the detail are here.

Now, understand the meaning of Goodwill impairment loss first

Definition of Goodwill impairment loss

In general words, if Company’s goodwill is lost his market value then it is called goodwill impairment loss. This world is given under Financial Accounting Standards 142

Steps for calculating goodwill impairment loss

1st Step

When There is no impaired goodwill loss

Positive Goodwill = Fair market Value of company – Carrying Value of company (book value of assets + book value of goodwill – book value of liabilities

fair market value of company = market value of assets - market value of liabilities

2nd Step

There is existence the impaired goodwill loss in business.

Negative goodwill ( Goodwill impaired loss ) = Carrying value of company ( Book value of assets + book value of goodwill- book value of liabilities ) – fair market value of company .

You can also detailed study of steps of goodwill impairment loss with two examples in the PDF file of and read summery of 142 of SFAS at

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Accounting Expert April 2, 2009 at 8:19 PM  

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