Am I correct in assuming goodwill can only be capitalized if a company has made an aquisition?

And if so, would the goodwill be on the balance sheet forever (assuming impairment = 0)

I’m a tad bit confused…

Yes, goodwill arises upon an acquistion. A company cannot create goodwill itself.

Yes, goodwill remains on the balance sheet unless it is written down as a result of impairment (under IFRS and US GAAP). However, under some local GAAPs which are not tested in the CFA exam, goodwill is actually amortised.


Wojtek is right.

And don’t worry. you will get a healthy dose of goodwill at level 2.

Thanks very much guys!