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I know its rare to be allowed to reverse the goodwill impairment but in this case will it be allowable:?
A co. Was involved in litigation regarding food poisoning by its customers.Ultimately it was found that the customers had eaten from some other restaurant that was unhygenic and so the co. Was ruled to be innocent by the court and the public again viewed it as a nice company.Can the goodwill impairment which had occured during litigation be reversed?
Thanks
It sounds, from your question, that there could be a justification for the reversal. The cause of the impairment was some outside factor unlikely to recur and which has been reversed by by the Court.
can goodwill be reversed? i think i have read somewhere that once goodwill is written off, it cannot be reinstated>?
In truly EXCEPTIONAL circumstances it MAY be reversible. Your examiner set a question some time ago where those exceptional circumstances applied and the goodwill was reversed.
As a general rule, internally generated assets are not recognised and “new” goodwill created after an impairment is exactly that – it’s new goodwill and therefore not recognised. But there may be the above-mentioned exceptional circumstances where theer is the possibility that an impairment may be reversed
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