Guys, IF a company impairs goodwill on the income statement, I would assume that the goodwill on the balance sheet should go down by the same amount. However, I was looking at Ebay’s current report where they impaired the goodwill by approx 1.93 billion on the income statement but the Goodwill does not seem to have gone down by the same amount on the balance sheet. Comments ?? Thanks.
Companies of EBay’s size engage in a lot of complex activity that can impact Goodwill. For example, if EBay impaired $100M of existing goodwill but acquired another company, creating $50M of additional goodwill, the expense wouldn’t match the change in the balance sheet (i.e. expense would be $100M, balance sheet would reduce by only $50M). Please correct me if I’m mistaken here… If you’re looking for real-world examples of the FSA you’re learning at LI, I think it’ll be easier to analyze smaller firms that operate in a single line of business and make fewer intercorporate investments.
Hmmm… I don’t think that’s it. In the 9 mos ended 9/30 they took a goodwill imparment of 1.4 B, goodwill dropped on the balance sheet by 400M, and thy didn’t do anything like 1B of acquisitions. I would also like to know the answer to the question. http://files.shareholder.com/downloads/ebay/180132422x0x137796/e81d8f4c-ca91-48ce-b34d-fa16b3ea6a66/eBay_EarningsRelease%20Q3%202007_FINAL.pdf