As we start 2024, the issue of goodwill impairment continues to be in focus, with uncertainty over the economic outlook and increasing discount rates putting greater scrutiny on the recoverable amount of goodwill in companies’ books.

Likely a familiar concept for readers, goodwill represents the excess purchase price over and above the fair value of the identifiable assets recognised as part of a business acquisition (net of liabilities assumed).

Companies must test goodwill annually, and the impairment of goodwill indicates that historic acquisitions have failed to meet original expectations and need to be written down.