Goodwill how is it treated

CFA Level I
#1

Is goodwill expensed or is it a just a loss on the income statment, the book isnt very clear or it could be because im starting to get really nervous.

#2

it is capitalized, recorded as an asset and tested annually for impairment

#3

there’s a question in sample 3

#4

a7m002 Wrote: ------------------------------------------------------- > Is goodwill expensed or is it a just a loss on the > income statment, the book isnt very clear or it > could be because im starting to get really > nervous. never expensed, it is an asset on BS until mgmt team thinks it impaired, then you write it off. sprint did a $29B write off of nextel. EBAY wrote off half of Skype. ] idiots overpaid

#5

goodwill used to be amortized, but that changed in 2001 i think. net net, key word is IMPAIRMENT TEST boom

#6

how does impairment affect NI

#7

If capitalized then it;s like depre expense and reduces Ni right?

#8

a7m002 Wrote: ------------------------------------------------------- > If capitalized then it;s like depre expense and > reduces Ni right? no!!! dude, it sits on BSheet until it is written off, when it is wreiotten off, it could lower Net income