In recent years, the treatment of the intangible asset of goodwill has undergone significant change as a result of the implementation of Financial Accounting Standards Board (FASB) Statement 142, “Goodwill and Other Intangible Assets.” Goodwill is the value of a going concern. You cannot touch it. You cannot bank it. You cannot sell it separately. By itself, it is valueless.
In your post, address the following questions:
- Assuming that all unrelated acquisitions are at arm’s length, why is the accurate valuation of goodwill so important?
- Why should you be concerned about it?
- Do you think that FAS 142 helped provide accuracy to the valuation of goodwill?