As i understand, Goodwill is acquisition price over fair value of an asset. But in one of the questions i came across (made a mental note but can’t remember where), it was calculated as acquistion over NBV if the costs can’t be assigned anywhere else. Can anybody shed any light on this…
what r you asking GW is a plug accountant use when a firm buys another and doesn’t know how to account for the excess over the net assets of the target. i have $5. you own a lemon stand with a book val of 3. you have a custimer list i want that is worth $1 accdg to my accountant your assets are worth 4. I pay 5 becuase i have to reward your earlier investors. plug is 1. Gwill = 1. boom
Thats what I understand…if I value it at 4, then goodwill is 1. okay spent some time and found the question, sample exam 3, question was something like this…where a company values an acquired firm’s R&D and the excess over NBV was accounted as goodwill. There was no mention of fair value and I got that answer wrong. The feedback says, excess over NBV is goodwill.
oldmonk Wrote: ------------------------------------------------------- > Thats what I understand…if I value it at 4, then > goodwill is 1. > > okay spent some time and found the question, > sample exam 3, question was something like > this…where a company values an acquired firm’s > R&D and the excess over NBV was accounted as > goodwill. > > There was no mention of fair value and I got that > answer wrong. The feedback says, excess over NBV > is goodwill. Q 37, samp exam 3