how long do you amortize goodwill
Prior to 2001, companies amortized the goodwill intangible asset by recording an expense on the income statement each year. Goodwill was taken at straight-line amortization over a period of up to 40 years.For example, if Company A purchased Company B for $450,000 (i.e., purchase price) and the book value of Company B was only $400,000, the goodwill intangible asset would be $50,000.The $50,000 asset would be amortized for the same amount each year for up to 40 years.If you assume that Company A decided to amortize the goodwill amount over 40 years, then the amortization expense listed on the income statement is $1,250 annually (i.e., $50,000 divided by 40 years).or example, if Company A purchased Company B for $450,000 (i.e., purchase price) and the book value of Company B was only $400,000, the goodwill intangible asset would be $50,000. The $50,000 asset would be amortized for the same amount each year for up to 40 years.
Goodwill is carried as an asset and evaluated for impairment at least once a year. Until 2001, goodwill was an amortization expense for a period of up to 40 years.Many companies used the 40-year maximum to neutralize the periodic earnings effect and report supplementary cash earnings that they then added to net income.n accounting, goodwill is accrued when an entity pays more for an asset than its fair value based on the companyâs brand, client base or other factors. Corporations use the purchase method of accounting, which does not allow for automatic amortization of goodwill.