07-03-2006, 07:10 AM
1)Goodwill is the excess of consideration given over the fair value of assets/net assets.
4 internally generated goodwill we may take an example. if ur business is going on very well. The fair value of ur net assets in books is 1 billion. u say that ur business can be sold for 1.2 billion. Now u can not increase the value of ur assets by .2 billion. This .2 billion is the interanlly generated goodwill, that is not allowed by IASs.
2)Now u may ask a question that if the fair value of net assets is 1 billion then how can biz be sold for 1.2 billion. if im doing the biz i would say that my biz has very loyal clients and a very good reputation in the industry. Thats y my biz can be sold for 1.2 billion.
Now tell me "can u ascertain the cost of customer loyalty or reputation of biz".
3)exactly. Goodwill appearing in accounts prepared under IASs will be the goodwill acquired with a biz unit.
and it is also computed as a difference b/w the consideration paid and fair value of assets.
Sory for a late reply. actually the problems is that, working in the firm we get quite less time to come online and reply the queries. But i would ask u not to get annoyed at ppl giving such remarks. u seem to be a nice student.
IFRS 3 Business Combinations discuss this in detail. It is also discussed in IAS 27 and 28. But if u r in module C u dont need to get into that.
anyways best of luck
and ask any more questions if u have
4 internally generated goodwill we may take an example. if ur business is going on very well. The fair value of ur net assets in books is 1 billion. u say that ur business can be sold for 1.2 billion. Now u can not increase the value of ur assets by .2 billion. This .2 billion is the interanlly generated goodwill, that is not allowed by IASs.
2)Now u may ask a question that if the fair value of net assets is 1 billion then how can biz be sold for 1.2 billion. if im doing the biz i would say that my biz has very loyal clients and a very good reputation in the industry. Thats y my biz can be sold for 1.2 billion.
Now tell me "can u ascertain the cost of customer loyalty or reputation of biz".
3)exactly. Goodwill appearing in accounts prepared under IASs will be the goodwill acquired with a biz unit.
and it is also computed as a difference b/w the consideration paid and fair value of assets.
Sory for a late reply. actually the problems is that, working in the firm we get quite less time to come online and reply the queries. But i would ask u not to get annoyed at ppl giving such remarks. u seem to be a nice student.
IFRS 3 Business Combinations discuss this in detail. It is also discussed in IAS 27 and 28. But if u r in module C u dont need to get into that.
anyways best of luck
and ask any more questions if u have
