Essay on Achieving Goodwill in a Business

vi) Goodwill- The beginning balance for Goodwill was determined by finding the difference between Total Assets and Total Liabilities at the beginning . Goodwill accounts for all the intangible assets that were transferred from the old company to the new company, including brand name, as well as a premium paid for the company. Goodwill was not amortized in this model.

Guilt is a powerful emotion that can greatly affect the course of a person’s life. Dunny’s character, in Robertson Davies’ Fifth Business, first experienced guilt at an early age due to a tragic accident. A snowball that was meant for Dunny hit a pregnant woman, Mrs. Dempster, causing her to go into premature labour. Although her child, Paul Dempster, survived, the guilt that Dunny experienced from his part in the situation would stay with him for the rest of his life. Guilt stayed with Dunny’s character throughout his life, and continually affected all of his actions.

In 1973 the Financial Accounting Standards Board (FASB) was established to set the financial accounting standards in the United States of America for nongovernmental entities. These standards are collectively called U.S. Generally accepted Accounting Principles, or U.S. GAAP. The Securities and Exchange Commission (SEC) and the American Institute of Certified Public Accountants acknowledge the authority of these standards (FASB, n.d). A “proven, independent due process” is used to collect the viewpoints of the financial statements prepares and users for the constant improvement of these standards. An Accounting Status Update(ASU) is not an authoritative source however documents the amendments to communicate the changes in the FASB Codification for a user to understand the reason and future of those changes (FASB, n.d).

Too many disposals of small groups of assets that are recurring in nature qualify for discontinued operations under prior GAAP. This caused financial statements to be less decision useful for users. Additionally, the guidance on discontinued operations resulted in higher costs for preparers because it can be complex and difficult to apply. The FASB issued ASU 2014-08 to address those problems by changing the criteria for reporting discontinued operations, while simultaneously enhancing convergence with the International Accounting Standard Board’s reporting requirements for discontinued operations.

Goodwill is an intangible asset for which the accounting methods are pronounced by FASB issued _SFAS No. 142_, "Goodwill and Other Intangible Assets." Goodwill is an earning power concept in which its value is an approximation equal to the discounted present value of future earnings that would exceed normal industry earnings. Goodwill is recognized as an intangible asset when it is acquired through a purchase of an existing company. Its value is determined by the excess of the total fair value above the fair value of distinguishable net assets. Amortization of goodwill is

“The uproar over fair value accounting practices, which some critics have blamed for the depths of the global financial crisis, threatens to sink a long-sought move by countries around the world toward a single set of international financial reporting standards (IFRS). The U.S. Financial Accounting Standards Board (FASB) has been working with London's International Accounting Standards Board (IASB) since 2002 toward what accounting professionals call convergence. The Securities & Exchange Commission (SEC) is expected to announce its road map for conversion sometime this month, which will probably include early adoption in 2010 for about 110 of the largest U.S. companies with business operations throughout the world. The key difference between U.S. Generally Accepted Accounting Principles (GAAP) and IFRS is that U.S. standards are based on explicit rules while the international standards' reliance on principles gives companies more room to use their judgment in deciding how to recognize revenue and other key metrics. Adoption of IFRS would also probably trigger a big tax hike for U.S. companies, which would no longer be able to use the last-in-first-out [LIFO] inventory accounting method, which doesn't exist under the international standards. The LIFO method assumes that goods purchased most recently are sold first and that the

As per your request of an analysis of the following topics: Adjusting lower of cost or market inventory on valuation, Capitalizing interest on building construction, Recording gain or loss on asset disposal, and Adjusting goodwill for impairment. The Financial Accounting Standards Board (FASB) established clear guidelines addressing the items mentioned above. I will outline that FASB generally accepted accounting standards (GAAP) affect each area, and how these improvements to the company will benefit the company’s financial health (FASB, 2010).

Goodwill impairment refers to the adjustment of the goodwill value, with respect to the value at the time it is original’s recognition. Goodwill impairment usually occurs when the carrying value of the goodwill exceeds its fair market value. What it comes down to is that goodwill impairment usually occurs as a consequence of a decreased brand value, or negative market information about a company or the need to adjust value of overpaid assets that were acquired in the past (www.fool.com).

2. There are several major issues that need to be taken into consideration between ABC’s companies, Dynamic and ZD.

SFAS 142 addresses financial accounting and the reporting of goodwill acquired as well as other intangible assets. SFAS 142 deals with the initial recognition and measurement of acquired intangibles, except those acquired in a business combination. In other words, SFAS 142 deals with how intangible

Goodwill is a long-term asset categorized as an intangible asset. The amount of goodwill is the cost to purchase the business minus the

1. What factors contribute to the rapid pace of change in business? Is the pace likely to accelerate or decrease over the next decade? Why?

Main focus of IASB for introducing new standard for business combinations was that financial statements of companies became more realistic and to represent real economic position and value of a company. Therefore restriction to acquisition method as the only option for business combination is the advantage of new standard since using this method, companies do not have a choice whether to recognize goodwill arising from business combinations. Amortization was changed with impairment because amortization of goodwill can lead to arbitrary accounting according to IASB (Shinhan Financial Group n.d., p. 4). Problem arising is that impairment test and determination of recoverable amount require an active market with homogenies assets and available prices which is hard to determine as far as intangibles are concerned. Consequently, this leads to more subjective decisions regarding measurement and leaves a lot of space for management impact on goodwill. Therefore aim of IASB for transparency and full fair value model is not realized.

Business plays a major role within our society. It is a creative and competitive activity that continuously contributes to the shaping of our society. By satisfying the needs and wants people cannot satisfy themselves, businesses improve the quality of life for people and create a higher standard of living.

It’s important to call that under US GAAP, estimates of useful and residual value, and the method of depreciation, are reviewed only when events or changes in circumstances indicate that the current estimates or depreciation method are no longer appropriate. Unlike IFRS, the revaluation of property, plant and equipment is not permitted.