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  1. Profile photo of anisa786 says

    Please explain why reversal of impairment on goodwill is treated differently. I did not understand that part and why it’s new and internally generated. I know there are two types of goodwill….one is purchase (through acquisition of a business) and the other is like your brands and mastheads (created within the business)

    • Profile photo of kangmo says

      Exactly, and if I am not mistaken, internally generated goodwill can never be capitalized. This is in relation with the prudence principle. Also, measurement would be very difficult for an internally generated goodwill. For externally purchased goodwill, we at least know we spent a bunch of money on it, so this leads to the measured goodwill.

      The other treatment (recognizing internally generated GW) would make big bath accounting too easy and financial statements too unreliable.

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