Goodwill generally refers to the potential economic value that can bring excess profits to business operations in the future, or the capitalized value of a company whose expected profitability exceeds the normal profitability of identifiable assets. When a company's goodwill is impaired, how should the relevant accounting entries be made?

Accounting entries for goodwill impairment

If an enterprise determines that goodwill is impaired based on the asset impairment standards, it should make the following accounting entries based on the amount that should be written down. Record:

Debit: Asset impairment loss—goodwill impairment provision accrued

Credit: Goodwill impairment provision

What is goodwill?

Goodwill refers to the potential economic value that can bring excess profits to business operations in the future, or a company's expected profitability exceeds the normal profitability of identifiable assets (such as the average social return on investment) )’s capitalized value. Goodwill is an integral part of the overall value of a business. In a business merger, it is the difference between the investment cost of purchasing the business and the fair value of the net assets of the merged business.

What are intangible assets?

Intangible assets refer to identifiable non-monetary assets without physical form owned or controlled by an enterprise. They are divided into broad and narrow senses: Intangible assets in a broad sense include monetary funds, financial assets, long-term equity investments, and patents. Rights, trademark rights, etc.; intangible assets in a narrow sense include patent rights, trademark rights, etc.

What is asset impairment loss?

Asset impairment loss refers to the loss caused by the recoverable amount of an asset being lower than its book value. The new accounting standards stipulate that the scope of asset impairment mainly covers the treatment of impairment of fixed assets, intangible assets and other assets unless otherwise specified.