Is Goodwill an Asset?

Richard Gore, PhD, and Dyan Zimmerman, CPA

The recent global recession resulted in a dramatic increase in both the number and size of goodwill impairment charges since it began. For example, several large companies wrote off significant amounts of goodwill, including Time Warner Inc. ($25 billion) and ConocoPhillips ($39 billion). No sector was safe from the downward spiral of the economy, but some industries were especially hard hit. In the retail industry, Neiman Marcus ($291 million), Bon-Ton Stores Inc. ($17.8 million), American Eagle Outfitters ($6.7 million), Dick's Sporting Goods ($193.4 million), and Ann Taylor Stores ($286.5 million) were just some of the retail companies that reported impairment charges related to goodwill. Companies in other industries have also been faced with impairments. Park-Ohio Holdings Corp. recorded a $95.8 million goodwill impairment charge and Sinclair Broadcast Group Inc. reported a $193.5 million charge related to goodwill.