New to the BSchool and in my first ever accounting course - I was so looking forward to the scientific process behind this. Coca Cola and Walmart are giants in the case study business. Every course that had case studies used these two companies always. It got to a point where if you lost something in your house, you'd have to removes tons of Coke & Walmart print out's to find your remote control or cell phone. Coke's goodwill $ amount was quoted as among the highest around and we were taken through the process in which it was calculated. And till date I haven't been able to reconcile with the "science" in the process. Frankly, I don't know how those accountants do it. What is more baffling is the complete absense of "Badwill" in some companies that have "goodwill". At least some "badwill" reflecting a collective public hatred towards the company in the liability section would have appeased symmetry seekers like me. Instead we have a fuzzy "Negative Goodwill".
In today's economy, I would like to see what happens to the millions of dollars of goodwill that banks have put out there. Citibank for example has $ 41 Million"good will" in their balance sheets. So do other banks. Will they be impaired and go down to zero in the next balance sheet? Shouldn't it move as "BadWill" and find a place in the liabilities section. Or will people say that NYSE:C still has "some" "goodwill" left? It is not just the banks. The interesting questions here are; Should any company have goodwill? And varying amounts of it? Sathyam computers had monetized goodwill!!! I would like to know - Is goodwill binary like virginity or marriage? Once you have lost goodwill can you re-acquire it? Either you have it or you don't and really you can't have a lot of virginity or be too married. Reminds me of the Seinfeld situation with Elaine;
Elaine at her job interview at Doubleday with Mrs. Landis.
LANDIS: Of course, Jackie O. was a great lady. Those are going to be some tough shoes to fill. Everyone loved her. She had such...grace.
ELAINE (gushing): Yes! Grace!
LANDIS: Not many people have grace.
ELAINE: Well, you know, grace is a tough one. I like to think I have a little grace...not as much
as Jackie -
LANDIS: You can't have "a little grace." You either have grace, or you...don't.
ELAINE: O.K., fine, I have...no grace.
LANDIS: And you can't acquire grace.
ELAINE: Well, I have no intention of "getting" grace.
LANDIS: Grace isn't something you can pick up at the market.
ELAINE (fed up): Alright, alright, look - I don't have grace, I don't want grace...I don't even say grace, O.K.?