Can impaired goodwill ever be re-instated?

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    vinnie2010
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    Hi,

    I have just listed to the lectures for NCAs (Chapter 5 of the lecture notes) and when it comes to the re-instatement of previosusly impaired goodwill the lecturer tells an example of a mineral water company whose GW was impaired due to a bad review in a newspaper. The newspaper was however taken to court and had to publicly appologise and revoke it’s accusations. The GW was then apparently re-instated up to 80% of its previous amount.

    The question of re-instating GW has also just come up in the BPP i-Pass questions however they say that GW can absolutely never be re-instated.

    So, can an impairment of GW due to exeptional external circumstances be reversed or not?

    Thank you very much for clarification!


    Profile photo of MikeLittle
    MikeLittle
    Keymaster
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    Hi – there is in fact a past exam question – sorry, cannot remember the name! – where Graham Holt actually does set the example which is similar to the one in the lecture notes. I accept that it’s got to be VERY, VERY, VERY exceptional circumstances, but GH sets the example where it IS possible


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    ahsanpervez
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    yah as far as bpp and kaplan study material is concerned they say that this would b very Exceptional case when the Goodwill b restated as mentioned above in example as court ordered n this cam a legal issue n 2nd if the Goodwill of that company can go down becoz of the news then it can also go up as well coz the same newspaper wil b apologizing.well that is what common sense say’s I guess. but If one is not sure he or she may right assumption in paper that to me this is not an Exceptional case so Goodwill can’t be restated or vice versa……….


    Profile photo of MikeLittle
    MikeLittle
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    General principle – gw can never be unimpaired. However ……

    It’s most unlikely in practice and only very very very rare in exams. But it has happened in the past

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