It appears the mass scale writedown in goodwill is finished, at least for now, according to a recent KPMG study of more than 1,700 U.S.-based public companies.

The Big 4 firm studied goodwill impairments from 2005 through 2009 and discovered impairments declined significantly in 2009 from 2008, with 20 percent fewer companies writing down goodwill.

Goodwill is an intangible asset that arises on the corporate balance sheet as a result of a merger or acquisition. It represents the amount a company pays to acquire a business that exceeds the fair value of the collective net assets of the target business. Accounting Standards Codification Topic 350, Intangibles, requires companies to check the value of goodwill each year and write it down if it is no longer supported by market values.

KPMG’s study shows goodwill impairment charges across the 1,700 companies fell from $340 billion in 2008 to $92 billion in 2009. Only 12 percent of companies in the study took a charge for goodwill impairment in 2009 compared with 17 percent in the prior year, the study said.

The study showed the technology hardware sector accounted for 23 percent of total goodwill impairment charges in 2009, followed by telecommunication services. Banks had the highest level of goodwill impairment charges in 2008, but represented only 4 percent of the total goodwill charges in 2009, the firm said.

Gary Roland, managing director at consulting firm Duff & Phelps, said he’s not surprised by the data. Impairments are declining because writedowns in 2008 left less goodwill for companies to impair and market capitalizations for many companies are recovering, he said. As market cap improves for a company, it means a larger gap between fair value and whatever value may be on the books for goodwill.

“If the market cap has increased for a company, there’s that notion of reconciling at some level to market cap,” Roland said. “As market caps increase, presumably those values reflect the value of the company as a whole.”

Duff & Phelps conducted an electronic survey of 2,500 members of Financial Executives International in October 2009 and discovered more than two-thirds of those companies reported taking a goodwill impairment charge. The firm has plans to update its study later this year, Roland said.