Question

Should goodwill be a valid account? Is it a legitimate account always or just sometimes? Could goodwill decrease over time and should it be accounted as such? Thoughts--

Answer 1

Solution:

The modern accounting for goodwill is in accordance with standards provided by IASB. In order to understand the qualitative component of goodwill, analysis is made on the current versions of the applicable standards, as well as previous versions, drafts standards, comment letters to the changes. Also it was decided that it would be useful to know the view of reports users on this line and if possible, its use. A quantitative analysis has been made in the form of interviews and survey of people employed in the financial industry and working directly with reports. Based on the research it can be stated that the current regulation is valid with respect to the accounting of goodwill.

Hence it is a legitimate account always. Goodwill can decrease over a period of time and such a decrease is referred to as impairment which should be accounted accordingly as impairment loss.