What can lead to goodwill creation? How do you test goodwill for impairment? And why is it necessary to conduct impairment testing?

Goodwill is measured  as the difference between aggregate of the acquisition date fair value of the consideration transferred  and the amount of any NCI and the acquisition date fair value of the acquirer 's previously held equity interest in the acquiree and the net of the acquisition date amounts of the identifiable assets acquired and the liabilities assumed ( measured in accordance with IFRS 3).

Goodwill is not subjected to depreciation but is subjected to an annual impairment review. The purpose is to know whether the recoverable amount is higher or lower than the amount at which the Goodwill is shown in the statement of financial position .

Goodwill is created when a company is acquired by another and the amount paid is exceeding the value of net assets less liabilities.

Goodwill is the difference between the aggregate value of an enterprise as a whole at market price and the total fair value of net assets. In accordance with IAS 38 Intangible Assets, the Standard specifies that internally generated goodwill is not recognized as an intangible asset because it is unaffordable because it can not be separated Nor arises from a contractual obligation or legal rights. As regards the recognition of internally generated goodwill as an intangible asset, the criterion referred to the difficulty of recognizing the difficulty of determining whether a identifiable asset would generate future economic benefits with the difficulty of reliably determining the cost of the asset.    In accordance with IAS 38 Intangible Assets and IFRS 3 Business Combinations  Negative goodwill arises when the fair market value of the assets purchased is higher than the price actually paid to acquire them. If the amount recorded for the intangible asset decreases as a result of the revaluation, the impairment loss is recognized in profit or loss.

Goodwill can be created by doing good business, others ( vendors/ clients/ stakeholders) want the company provide good quality/ relevant products and services.

-  goodwill impairment is a charge that a company record when goodwill is carrying value on financial statements exceeds its fair value, goodwill  impairment arises  when there is deterioration in capabilities of acquired assets to generate cash flow, and the fair value of the goodwill dips down its book value