The goodwill amount of $4.5m is an intangible asset on the...

The goodwill amount of $4.5m is an intangible asset on the balance sheet, and is the difference between the purchase amount and the tangible assets acquired in the transaction. It is not an expense item. Each year the business needs to test that the goodwill amount is supported by the likely earnings of the business. If not, they need to take an impairment in the goodwill amount reduces. This would be a non-cash impact on reported earnings. The last Annual Report showed that the goodwill amount is appropriate for the likely earnings.