Good news about goodwill – The reporting rules just got easier for private dealerships
Abstract: There’s now one less thing for private dealerships to worry about after a merger or acquisition deal closes. The Financial Accounting Standards Board has simplified its rules for the subsequent measurement of goodwill. This article defines goodwill and how its impairment can send up a red flag with investors and lenders. But the new rules offer an alternative goodwill measurement method that makes taking an impairment loss less likely and removes the requirement to perform impairment testing annually. A sidebar explains how a “bargain purchase” can sidestep goodwill accounting issues.