Acquisition Accounting II: Goodwill, more plug than asset
aswathdamodaran.substack.com
There is no asset on a company’s balance sheet that wreaks more havoc on valuation and good sense than goodwill. The first problem with goodwill is that it sounds good, and when something sounds good, people feel the urge to pay for it. The second problem is that, notwithstanding claims to the contrary, it is not an asset but a plug variable that measures everything and nothing at the same time.
Acquisition Accounting II: Goodwill, more plug than asset
Acquisition Accounting II: Goodwill, more…
Acquisition Accounting II: Goodwill, more plug than asset
There is no asset on a company’s balance sheet that wreaks more havoc on valuation and good sense than goodwill. The first problem with goodwill is that it sounds good, and when something sounds good, people feel the urge to pay for it. The second problem is that, notwithstanding claims to the contrary, it is not an asset but a plug variable that measures everything and nothing at the same time.