Goodwill Loss

A goodwill loss occurs when purchase price is higher than net asset value of the acquired entity. This could either be reflected in the profit & loss statement or the balance sheet. In the balance sheet, it could be settled to the share premium account or the general reserve account. To write off the loss against share premium account requires regulatory approval. Accounting standards mandates that companies must conduct the goodwill impairment test once every fiscal.

Updated On: 09.10.04