Goodwill

Goodwill

Determination of Goodwill:

Specific Attributes Approach  specific attributes identified  and valued accordingly such as highly advantageous strategic locations,superior management team, outstanding sales organization and unusually good reputation.

Indirect Valuation goodwill is the difference between the purchase price and fair  value of the net assets acquired.

Excess Earnings goodwill represents the expected value of future above normal (superior) financial performance. (Purchase of Average Earnings, Capitalization of Average Excess Earnings, Present value of average earnings)

*Internally generated goodwill is not recognized as an asset because it is not identifiable resource (it is not separable nor does it arise from contractual right)

*Goodwill no amortization but tested for impairments.

 

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About Jonathan Ruiz CPA

Entrepreneur, CPA Mentor, Stock market Newbie Mentor, Influential Author and Master's Degree in International Business graduate in Hult International Business School, UK. A father of two lovely daughters.
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