liikearvoksi

Liikearvo, translated in Finnish as goodwill, is a non-physical intangible asset that arises when a company acquires another business and the purchase price exceeds the fair value of the identifiable net assets acquired. The translative form liikearvoksi is used in texts to indicate that an amount is recognized or accounted for as goodwill.

Goodwill originates in business combinations and reflects elements such as synergies, customer relationships, brand value, and assembled workforce that are not separately identifiable. It is calculated as the excess of the consideration transferred and, if applicable, the fair value of any non-controlling interests over the net fair value of the identifiable assets and liabilities acquired. If the purchase price is lower than the fair value of net assets (bargain purchase), the resulting negative goodwill is recognized as a gain in the income statement.

In accounting practice, goodwill is initially recognized as an asset but is not amortized under IFRS. Instead, it is tested for impairment at least annually, or more frequently if indicators of impairment exist. If impairment is identified, the carrying amount of goodwill is reduced through profit or loss. Impairment testing may involve comparing the recoverable amount of the cash-generating unit or group of units to which the goodwill has been allocated.

Goodwill is presented on the balance sheet within intangible assets or as part of a reporting unit’s goodwill. It is governed by standards such as IFRS 3 on business combinations and IAS 36 on impairment, with national adaptations in Finnish accounting practice.