Goodwill impairments at U.S.-based companies fell dramatically last year, according to a new study.
The study, by KPMG, found that goodwill impairments began to decline sharply across a number of industries throughout 2009, with the number of companies recording goodwill impairment charges dropping by nearly 20 percent. In contrast, during 2008, more companies took greater goodwill impairment charges.
Based on financial information from more than 1,700 U.S.-based public companies, goodwill impairment charges declined to $92 billion in 2009 from $340 billion in 2008, a 73 percent drop. In addition, the number of companies recording goodwill impairment fell from 268 to 217. The KPMG study analyzed goodwill impairment for public companies from January 2005 through December 2009 and identifies those industries most heavily affected in 2009.
Only 12 percent of the companies in the study recorded a goodwill impairment charge in 2009, compared to 17 percent that recorded a goodwill charge in 2008.
With signs of improvement in the U.S. economy and stock market in 2009, and the large goodwill write-downs in prior years, it is not surprising that goodwill impairment charges have retreated in our most recent study, said KPMG partner Seth Palatnik in a statement.
The study found that in 2009 the hardest-hit industries in terms of actual dollar impairment charges taken were technology hardware and equipment companies, which accounted for nearly 23 percent of the total goodwill impairment charges, followed by telecommunication services, and software and services. Banks, which had the highest level of goodwill impairment charges of the companies surveyed in 2008, represented only 4 percent of the total charges of the companies assessed in KPMGs current study.
Overall, goodwill charges for the banking industry decreased by over 90 percent in 2009. Likewise, goodwill charges for the materials, capital goods and energy industries also decreased significantly from 2008 to 2009. Due to the generally lower charges taken across all industries, the median goodwill impairment charge decreased from $258 million in 2008 to $97 million in 2009, a decline of approximately 60 percent.
The study can be found at www.kpmg.com/gvi.
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access