Quote:
Originally Posted by Xanthos
I may be wrong on this, but the way I interpreted it, over time the sale value of GMs assets will increase to a more fair value, which would decrease the gap between the reported value of GMs assets and the value of their equity, therefore eliminating the need for the goodwill balance.
- X
P.S. -
It seems to be more along the lines of GM went bankrupt, therefore their liabilities decrease in value. However, at the same time the treasury infused a large amount of equity - more than the decrease in liabilities. Left side goes down, right side goes up, therefore something has to be added to the left side to balance the equation.
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yes, you test it for impairment and the amount goodwill decreases by is charged to the income statement as an expense for the period.