How to Record Unallowable Goodwill Amortization
Recording the amortization of goodwill arising from business combinations, which is non-reimbursable per FAR 31.205-16.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Unallowable Expenses - Goodwill Amortization | Debit | 5,000.00 | - |
| Accumulated Amortization - Goodwill | Credit | - | 5,000.00 |
💡 Accountant's Note
FAR 31.205-16 prohibits the recovery of goodwill amortization. These costs must be segregated into an unallowable account to ensure they are excluded from the indirect rate calculation.
Practitioner & Systems Framework
💻 ERP Architecture
Set up a specific cost element or account code flagged as 'Non-Allowable' in the GL chart of accounts.
⚠️ Audit Flags
DCAA Incurred Cost Electronic (ICE) submission audit of unallowable cost pools.
📄 Required Documentation
Business combination agreement, purchase price allocation (PPA) valuation reports, and amortization schedules.
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