What is it?
Thanks in advance
Where did you encounter this phrase?
What was the context?
This is the term used in cases where a company recognizes itself as more valued on market regardless there is not any takeover. They can for example, declare and classify the list of its client as valued asset. This is not permitted by standards and the only GW which can be recognized is in the moment of takeover where company’ market price is established and someone is willing to pay for this difference in price over the company’s intrinsic value.
@S2000magician: it says like this on FRA, long lived assets. “Any goodwill created in business combination is capitalized on the BS. The costs of any internally generated “goodwill” are expensed in the period incurred”. Very confusing to me, that they are expensed on the period incurred, so you make this list of clients as a valued asset, but actually you cannot capitalize it, but recognize it in the period incurred.
Thank both of you guys
@ Cristophe
Yep. This is referred to company’s investments to its market reputation and intangible asset what cannot be sold separately on market unless is entire company sold to buyer. Since the goodwill can be recognized and measured only in the moment of sale of entire company, company’s cash investment into its market reputation of any kind can be only expensed and cannot be recognized (shown) as intangible asset in company’s BS.
Maybe the list of client is not the best example since is not investable, but consider company’s investments into some kind of its process improvement, marketing and other costs. Such costs must be expensed not capitalized as intangible asset.
Thank you for answeing Flash