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The accounting treatment for goodwill remains controversial within both the accounting and financial industries because it is fundamentally a workaround employed by accountants to compensate for the fact that businesses when purchased are valued based on estimates of future cash flows and prices negotiated by the buyer and seller, and not on ...
In accounting, an impaired asset is an asset which has a market value less than the value listed on its owner's balance sheet.. According to U.S. accounting rules (known as US GAAP), the value of an asset is impaired when the sum of estimated future cash flows from that asset is less than its book value.
Estimates of future cash flows used to determine the present value of an investment are made on a continuous basis and do not rely on a triggering event to occur. Even though there may be no objective evidence that an impairment loss has been incurred, revised cash flow projections may indicate changes in credit risk.
This secular trend resulted in AT&T taking a massive $4.4 billion non-cash goodwill impairment ... and it's secure since AT&T is growing free cash flow. Through three quarters, its FCF totaled $12 ...
Operating cash flow of $126 million in Q3 was quite strong and performance should be similar in Q4. ... It also exclude stock-based compensation and the goodwill impairment referenced in the ...
James River Coal (NAS: JRCC) carries $26.5 million of goodwill and other intangibles on its balance sheet. Sometimes goodwill, especially when it's excessive, can foreshadow problems down the road.
An impairment loss is determined by subtracting the asset's fair value from the asset's book/carrying value. Trademarks and goodwill are examples of intangible assets with indefinite useful lives. Goodwill has to be tested for impairment rather than amortized. If impaired, goodwill is reduced and loss is recognized in the Income statement.
Methodologies for allocating amortization to each accounting period are generally the same as those for depreciation. However, many intangible assets such as goodwill or certain brands may be deemed to have an indefinite useful life and are therefore not subject to amortization (although goodwill is subjected to an impairment test every year).