Goodwill impairment
Goodwill impairment is an accounting write-down of goodwill when the value of the business unit to which it relates falls below its carrying value on the balance sheet. It is an accounting term rather than a legal one. It records that the premium paid for an acquired business is no longer supported by expected future cash flows.
How BC law treats it
There is no specific BC law on goodwill impairment; it is governed by accounting standards. The most relevant legal point is that impairment can affect financial covenants in loan agreements and earn-out or price adjustment calculations in purchase agreements.
What it means for your business
A business with acquisition debt should check whether an impairment could trigger a covenant breach.
Risks and common mistakes
A significant impairment shortly after an acquisition may prompt the buyer to examine whether the seller's representations were accurate.
For the full explanation, see our entry on Goodwill.
General information about British Columbia and Canadian law, current to October 2026. It is not legal advice.
