The dollar amounts of goodwill impairments were already approaching highs not seen in years, but 2020 saw them explode even further, as companies faced the pandemic, a report by consulting firm Duff & Phelps has found. According to Investpedia, a goodwill impairment (GWI) occurs when there is deterioration in the capabilities of acquired assets to generate cash flows, and the fair value of the goodwill dips below its book value.

The dramatic increase in GWI last year arose despite the fact that, between 2018 and 2019, the total dollar amount of GWI recorded by U.S. public companies fell by 10 percent from $78.9 billion to $71 billion. But its levels were still the second highest since 2008. And the number of GWI events actually increased by 4 percent, from 307 in 2018 to 318 in 2019, with the average GWI per event rising by 21 percent in 2019 to $223 million.

Then, in 2020, things got even worse. The disclosed top 10 GWI events for 2020 reached a combined $54 billion, far surpassing the $37.4 billion for the top 10 in 2019. The report noted that full 2020 calendar year-end results for U.S. public companies will not be known for some time, but it added that early reporting points to overall GWI already exceeding $120 billion in 2020.

The report noted that U.S. companies recorded a total goodwill impairment of $188 billion in 2008, the height of the financial crisis. If the ultimate 2020 figure ends up lower, the report said it will largely be because of government interventions in the economy over the past year, particularly the Federal Reserve's asset-buying programs.