Question

analyze the write-off of the $23 Billion in GOODWILL by General Electric (GE).....Is there really an ASSET called GOODWILL????....Should Goodwill be recorded as an EXPENSE????

Answer 1

Goodwill :

Goodwill is a long-term (or Noncurrent) asset categorized as an intangible asset. Goodwill arises when a company acquires another entire business. The amount of goodwill is the cost to purchase the business minus the fair market value of the tangible assets, the intangible assets that can be identified, and the liabilities obtained in the purchase.

The amount in the Goodwill account will be adjusted to a smaller amount if there is an impairment in the value of the acquired company as of a balance sheet date. (Private companies may opt to amortize goodwill generally over a 10-year period and thereby minimize the cost and complexity involved with testing for impairment.

Goodwill Write off :

An impairment is recognized as a loss on the income statement and as a reduction in the goodwill account. The amount that should be recorded as a loss is the difference between the current fair market value of the asset and its carrying value or amount (i.e., the amount equal to the asset's recorded cost

Conclusion : When Company Identified as a loss of $23 Billions then it is write off and adjusted as a expense in Income Statement