4 ms·
That doesn't sound super unreasonable to me. Imagine if Amazon suddenly was a different company with a different name, holding everything else the same. How wou
by mruts 7y ago
That doesn't sound super unreasonable to me. Imagine if Amazon suddenly was a different company with a different name, holding everything else the same. How would this affect cashflows and sales? The difference in sales between this hypothetical company and Amazon is essentially what goodwill is. $14B sounds okay when you think about it like this.
- kgwgk 7y agoNo, that’s not what $14bn of goodwill in Amazon’s balance sheet are.
- mediaman 7y agoGoodwill is the accounting balance recorded when a company buys another company for more than the value of its assets. If you have $1bn in assets, and you sell to my company for $2bn, $1bn is recorded as the assets bought and the other $1bn has to be recorded somewhere - and that somewhere is 'goodwill.' Later, if the acquisition turns out to have been a bad idea, and what I bought from you was worth only $1.2bn, I will record an $800mm 'goodwill impairment' that would be a loss on my income statement and 80% of that goodwill would no longer be recorded as an asset.
- anbop 7y agoAnd “assets” as accountants define them are an almost useless metric for knowledge-based companies.