Goodwill

Goodwill only arises from acquisitions; a company that built the same brand and customer base internally records nothing. It is not amortised under Ind AS but is tested annually for impairment, so it sits unchanged on the balance sheet until management concedes that the acquisition disappointed. Large goodwill relative to equity is therefore a stored risk: an impairment can wipe out several years of profit in one non-cash charge. Because it cannot be sold separately and has no liquidation value, analysts often deduct it when computing tangible book value.