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<blockquote data-quote="Mokona" data-source="post: 3636378" data-attributes="member: 24891">Since no one answered...Q: What is goodwill?A: When one company acquires another they have the price they paid and the accounting value of all the tangible assets which were bought.&nbsp; Say Infogrames paid $100 million for the Atari acquisition.&nbsp; Atari's office buildings, insurance policies, cash, accounts receivable, &amp;c are the assets Infogrames gained in the purchase.&nbsp; Any difference between the purchase price of Atari and the value of Atari's assets would be accounted for as Goodwill.&nbsp; So if Atari had $15 million in assets then the Goodwill would be $85 million (100-15=85).Q: What is an impairment?A: If a company determines that it's no longer worth what was paid for it then it has too large a Goodwill value.&nbsp; An impairment is when you adjust down (i.e. decrease) the value of your Goodwill to reflect a decrease in the value of the company below the original purchase price.&nbsp; If Infogrames realized that Atari was only worth $50 million they'd decrease the Goodwill from $85 million to $35 million (50-15=35).&nbsp; They'd decrease their stated profit by $50 million (an impairment charge of 85-35=50).</blockquote>

[QUOTE="Mokona, post: 3636378, member: 24891"] Since no one answered... Q: What is goodwill? A: When one company acquires another they have the price they paid and the accounting value of all the tangible assets which were bought. Say Infogrames paid $100 million for the Atari acquisition. Atari's office buildings, insurance policies, cash, accounts receivable, &c are the assets Infogrames gained in the purchase. Any difference between the purchase price of Atari and the value of Atari's assets would be accounted for as Goodwill. So if Atari had $15 million in assets then the Goodwill would be $85 million (100-15=85). Q: What is an impairment? A: If a company determines that it's no longer worth what was paid for it then it has too large a Goodwill value. An impairment is when you adjust down (i.e. decrease) the value of your Goodwill to reflect a decrease in the value of the company below the original purchase price. If Infogrames realized that Atari was only worth $50 million they'd decrease the Goodwill from $85 million to $35 million (50-15=35). They'd decrease their stated profit by $50 million (an impairment charge of 85-35=50). [/QUOTE]

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