1) Goodwill is an accounting residual that goes away after the purchase of the company. In any reasonable accounting (e.g., GAAP), the goodwill is not an asset that you are buying and just gets wiped out by the merger accounting (the old "Pooled interests" was in part about letting the goodwill survive but only us old folks remember that).
2) Goodwill is broader now than the residual from purchasing a company. Look at the new GM $50B in goodwill that had nothing at all to do with purchasing a company but was a residual based on their obligations to employees devalued by their own crappy credit. The impairment later was a good thing based on improving credit.
3) If you care about past net income hit by goodwill impairment in an acquisition you just aren't thinking very well. That's history and your purchase of the company has only to do with operating income and synergies as you can't possibly get hit with that same goodwill impairment in the future as the acquisition wipes the goodwill to 0 at the start (obviously, there can be a new notion of goodwill in the acquisition).
4) "Would that be bad?" is just not the way to think about whether you should buy a company...
Goodwill on the income statement is worrisome. It means that the company overpaid for a prior acquisition and has been forced to write it down. It brings i to question the capability of management. This needs to be considered in context of the size of the company, the size of the acquisition, the amount of the goodwill written off and the reasons for the writedown. Goodwill on the balance sheet is less worrisome if is not a large portion of a company's assets.
Goodwill on a balance sheet is the result of a company merger-acquisition at a price above its tangible book value. It is an intangible asset whose value is subject to opinions. Writing it down by a Goodwill impairment is an accounting entry. It would case a lower earnings level or bigger loss, and I prefer the write downs in a potential company to buy stock. I'm not at a level of buying and selling companies, but intangible assets are difficult to consider. As a stock investor, I look much closer at market cap stock price to tangible asset value, and whether any of those tangible assets are over or under valued based on their worth in a sale.
True earnings and gross margins are very key, as is cash and cash equivalents.
I use many things to evaluate the financial situation of a company before buying into it.
I generally value goodwill as much lower than shown on the books, and ignore the impairment instead considering the cash flows and actual net earnings before accounting wizardry.
If you are looking to buy a company and see that they have $10 miilion worth of goodwill on their balance and $27 million of goodwill impairment on their net income, would that be bad?
