WHAT IS GOODWILL? The main method used by businesses to classify assets is to split them into tangible assets, which have a separate existence from the business (examples of which would include buildings, land and machinery), and intangibles which do not. Some clear examples of intangibles include goodwill, patents, research and development expenditure and trademarks. Intangible assets are usually created within the organisation over a period of time, by the company itself, rather than acquired
Words: 1350 - Pages: 6
economic benefits arising from assets that are not capable of being individually identified and separately recognised”. The definition effectively confirms that the value of the business overall is more than the sum of the accountable and identifiable net assets. Goodwill can occur either internally or as a result of business acquisition that therefore results in purchased goodwill. It is relevant to note here that self generated goodwill is not recognised as an asset under IAS 38 as it would allow
Words: 1838 - Pages: 8
------------------------------------------------- INTANGIBLES: “the building blocks of future economic growth.” 1. What was Google really interested in? In 2012, almost two years ago, Google announced that it was purchasing Motorola Mobility for $12.5 billion. This resulted in a perplexing event. Google was acquiring a huge company, whose great patent portfolio may provide the company with valuable intellectual properties that would allow the company to compete more directly against Apple, Microsoft
Words: 430 - Pages: 2
Situation Floyd Jones is the proprietor of the firm for which you work. Mr. Jones wants to acquire a manufacturing business. The business he wants to acquire, Sheraton Manufacturing, is insisting that Floyd pay not only for the identifiable net assets of the business, but also for “good will.” Floyd asks you: “What is good will?” Should I pay for it? If I should pay for it, how much should I pay?” Task: Write a Memo to Mr. Floyd Jones and give him a clear reply regarding the questions mentioned
Words: 661 - Pages: 3
other non-amortised intangible assets. -Difficulties surrounding the identification of a cash-generating unit. -Challenges in projecting cash flows and estimating various assumptions for the testing of value in use. Kolb’s TEL with Paul’s Critical Thinking Components: IAS 36 Impairment of assets-assess of key features Objects/Events: To prescribe the procedures that an entity applies to ensure that its assets are carried at no more than their recoverable amount. An asset is carried at more
Words: 1359 - Pages: 6
controversy focused on the recognition of goodwill as an asset, on its treatment and its link to the income statement. A search of the accounting literature yields two definitions of goodwill. One is that goodwill is the excess of purchase price over fair value of the net assets acquired. Alternatively, goodwill is defined as the price paid for excess earnings where excess earnings are defined as the difference between the earnings of the acquired asset over the normal earnings for a similar business.
Words: 2035 - Pages: 9
Allfoods Corp. (Allfoods) acquired 80 percent of the outstanding common stock of Baked Beans Corp. in a business combination. After value consideration transferred value of tangible and intangible assets acquired, libilities assumed, I recommend doing this consolidation general entry for the business combination: Dr. | Land | $ 21,000,000 | | | | Dr. | PPE | $ 7,000,000 | | | | Dr. | IPR&D | $ 15,000,000 | | | | Dr. | Trademark | $ 3,000,000 | | | | Dr. | Goodwill
Words: 807 - Pages: 4
GOODWILL What is the definition of Goodwill? Goodwill is an intangible asset that mostly appears as the biggest intangible asset on the balance sheet. The Goodwill can only be identified with the business as a whole. Therefore, the goodwill cannot be sold individually in the marketplace, while some other intangible assets can be sold. Goodwill is not easy to measure, because it includes exceptional management, desirable locations, customer relations, and so on. The determination of the
Words: 1220 - Pages: 5
Facts: On February 1 2009 Allfoods Corp. Announced that it was acquiring 80% of the outstanding common stock of Baked Beans Corp. On August 1 2009, the acquisition day, Allfoods paid 40 million in cash and issued 2 million shares of Allfoods to sellers. All the outstanding stock options granted to employees of Baked Beans will be replaced with Allfoods stock options. Allfoods share price was 30 on announcement date and 35 on acquisition date. Allfoods would issue an additional one million shares
Words: 4422 - Pages: 18
carrying value of his intangible assets for possible impairments in value. Carrying value must not be overstated or understated because this will cause it to show false amount on the balance sheet which would give misleading information. He was also told that the Goodwill booked on the Balance Sheet is not subject to amortization but must also be adjusted if necessary for possible impairment of value as well. Accounting for goodwill is not the same as accounting for other intangible assets. Unlike other
Words: 425 - Pages: 2
