Goodwill
The excess of the purchase price over the fair value of identifiable net assets acquired in a business combination.
FAR loves the acquisition-method plug (ASC 805): you back into goodwill as consideration transferred minus the fair value of identifiable net assets, where those net assets are remeasured to fair value, not book value, and include acquired intangibles like patents and in-process R&D (recorded separately from goodwill). The classic trap is flipping the subtraction: when fair value of net assets exceeds the price paid, there is no negative goodwill — you recognize a bargain purchase gain in earnings immediately. Remember internally generated goodwill is never recorded.
On the impairment mechanics (ASC 350): testing is at the reporting-unit level and may start with an optional qualitative “Step 0” before the quantitative test. Since ASU 2017-04, the loss is simply reporting-unit carrying amount minus its fair value, capped at the goodwill balance (the old “Step 2” implied-goodwill calc is gone, though some banks still drill it). Don’t confuse this with ASC 360’s recoverability test for long-lived assets, which uses undiscounted cash flows.
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