In a filing to Securities and Exchange Commission, Facebook said that WhatsApp’s goodwill is worth $15.3bn, which the social media major acquired for nearly $20bn.
Facebook said in its filing, "We believe the amount of goodwill resulting from the allocation of purchase consideration is primarily attributable to expected synergies from future growth, from potential monetisation opportunities, from strategic advantages provided in the mobile ecosystem and from expansion of our mobile messaging offerings."
"Goodwill is not expected to be deductible for tax purposes. In accordance with ASC 805, goodwill will not be amortised but instead will be tested for impairment at least annually and more frequently if certain indicators of impairment are present.
"In the event that goodwill has become impaired, we will record an expense for the amount impaired during the fiscal quarter in which the determination is made.
The social media major also revealed that WhatsApp’s user base is worth $2.03bn and its trademark is worth $448m and its acquired technology is valued at $288m.
Facebook reported 59% increase in its revenue for the third quarter in a year-on-year comparison, but it also reported that WhatsApp lost nearly $230m in the first half of 2014.
The loss was based on share-based compensation expenses and the issuance of common stock below fair value.
Fcebook paid nearly $20bn to acquire the messaging service but it was unable to pump in revenue because Whatsapp does not have advertising platform to drive the revenue like Facebook, and it only offers 99-cent annual subscriptions after a free first year.
Wall Street Journal reported WhatsApp co-founder WhatsApp’s Jan Koum saying in an interview at Code Mobile conference that, "We tried to do that early on because we didn’t have the long-term financial support of Facebook.
"With Facebook’s support, WhatsApp can now focus on mainly user growth instead.
"Over the next few years our focus will continue to be on growth.
"At some point we’ll get to a billion, two billion users. Revenue is something that… will happen five years from now, maybe later."
Koum added: "WhatsApp’s user growth is coming from Brazil, India, Mexico, Russia and Turkey, where more people are getting smartphones and downloading the WhatsApp app."
