Balance Sheet and Goodwill

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.

The main purpose of the balance sheet is to reflect and explain the accounting equation: Assets = Liabilities + Owner’s Equity. This equation is the fundamental model for recording and reporting transactions. It is essentially useful for showing what the company owns, what the company owes, and what does the owner’s equity remains. The ordering of the assets and the liabilities help the user to assess the liquidity of the company. For our purpose focusing on Walt Disney World, we are primarily focused on their assets and liabilities. In analyzing the balance sheet of our company, we will explain each aspects of the balance sheet in three separate parts.

The IASB sets international principles underlying the preparation of financial statements. It represents the foundation of international accounting (IASB, 2010). The FASB is a private board that sets the standards for the United States. The FASB makes sure standards make information accessible and understandable for the public and investors in the U.S. They define fair values and framework for fair values in (GAAP) Generally Accepted Accounting Principles (FASB, 2010). The two boards are working on joining to form one common set of standards that will rule internationally. The merger is not formally completed but they are already working together to create new rules that affect presentations across-the-board, i.e. according to The Economist (2010), “businesses may have to start putting leases on their balance-sheets” (Business & Finance, para 1). This is an example of an across-the-board rule that would affect any industry that leases equipment, property, or any item, and they must record it to their liabilities column.

22. The method of determining the minimum sales volume needed at a certain price level to cover all costs is A. breakeven analysis. B. equilibrium pricing. C. market share analysis. D. return on sales.

Ernest & Young, LLC. (2011a). Impairment of long-lived assets, goodwill, and intangible assets. Retrieved from http://www.ey.com/Publication/vwLUAssets/Impairment_of_long_lived_assets,_goodwill_and_intangible_assets/$FILE/ME_Impairment%20goodwill%20and%20intangible.pdf

Goodwill covers 92.64% of the total intangible assets as on 2016 with an increase of 1.28% from 2015. Goodwill here represents the goodwill acquired by the group through acquisitions of other companies and is subject to impairment test every year. The increase during the period of 2016 is negligible as there were $27.6m(approx.) worth of additions in goodwill during 2015, whereas the additions in 2016 were only $857k. No goodwill was impaired during the year. Goodwill related to theme parks was $4.37m for both 2015 and 2016 indicating no additions or impairment in both years.

Accounting Standards Codification (ASC) replaced all U.S. financial accounting standards in July 2009. Consequently, ASC 350, Intangibles – Goodwill and Other, replaced SFAS 142, Goodwill and Other Intangible Assets in September 2011. Under ASC 350, goodwill must be periodically tested for impairment. Goodwill impairment is determined through a two-step process outlined in ASC 350. However, in January 2014, an update to ASC 350 was released, which authorized an alternative method of accounting for goodwill servicing private companies that could consequently reduce their costs and simplify their accounting methods. Additionally, the international standard for goodwill impairment, IFRS 3, specifically mandates that companies must annually test goodwill for impairment. The specifics of the impairment test are entailed in IAS 36 Impairment of Assets, the international standard for accounting for goodwill associated with business combinations. This paper will analyze the effects of the accounting policies enacted under these standards and in particular analyze the efficiency of impairment testing methods versus amortization of goodwill and the connection of impairment methods with managerial and CEO compensation and earnings management. Finally, this paper will analyze if impairment testing under ASC 350 and IAS 36 or amortization, which is

As a matter of fact, within the limitation of a short paper, this study aims to provide a critical review on the Accounting issues in Business combination under the requirement of Australian standards – or to be specific, under the conceptual framework provided by the Australian Accounting Standard Board (AASB.) Firstly, evaluation on the exclusions from the scope of AASB 3 is brought about, followed by the implications of the requirement to use the acquisition method of accounting for business combinations, the determination of fair value of assets, the reasons why fair value method is chosen in a business combination and lastly, a review on the nature and treatment of goodwill or bargain purchase from these particular transactions will be mentioned.

The objective of this project is to reduce the cost and complexity of the subsequent accounting for goodwill for public business entities and NFP entities. This project will determine if certain intangible assets, such as customer relationships and non-compete agreements, should be included in goodwill. Research will be done to identify the most appropriate useful life of goodwill if it were to be amortized and on simplifying the impairment test (Hillenmeyer & McMillen, 2013).

Goodwill is seen as an intangible asset on the balance sheet because it is not a physical asset such as buildings and equipment. Goodwill typically reflects the value of intangible assets such as a strong brand name, good customer relations, good employee relations and any patents or proprietary technology.

AbuGhazaleh, Al-Hares, and Roberts (2011) indicate that International Accounting Standard (IAS) 36, Impairment of Assets, provides such an opportunity relative to recording goodwill impairment, which requires numerous discretionary choices by management. For example, when a business acquisition is made, any ensuing goodwill must be arbitrarily allocated to each of the acquiring entity’s cash generating units (CGUs) expected to benefit from that business combination. Then, goodwill associated with each CGU must be tested at least annually for impairment by comparing the recoverable amount of the CGU with its carrying value. A CGU’s recoverable amount represents the higher of the CGU’s fair value less the costs of disposal or its value in use, which is the present value of the cash flows expected from operating the CGU. If the CGU’s carrying value exceeds its recoverable amount, an

Balance sheets and income statements are a snapshot of a company’s stability and financial situation. Combined the statements show the income, expenses, and stockholder’s equity in the company. These statements are often analyzed by financial institutions when a company comes to them needing a loan. Stockholders and other investors also look at these statements to make sure their investment will return a profit for them. This paper will look at four different companies and their balance sheets and income statements. The companies are Eastman Chemical Company, Covenant Transportation

2. At the end of its first year of operations, Matlocke Company has total assets of $2,000,000 and total liabilities of $1,200,000. The owner originally invested $200,000 in the business, but has not made any further investments or taken any withdrawals. What is the first year 's net income for Matlocke Company?

One of these is with regards to goodwill and intangible assets with identifiable useful lives.

Goodwill is an asset that is an intangible asset. Goodwill represents the future economic benefits that arise from acquiring assets during a business amalgamation. A goodwill reflects the difference between the purchase price and the fair value of acquiring a company’s assets or a business merger. According to the generally accepted Accounting Principle goodwill is not amortized. Therefore, on the balance sheet there would not be an accumulated goodwill amortization. Impairment on a goodwill is tested annually or whenever issues arise. Note, if an impairment has occur the amount will be written down as an increase to the goodwill valuation account.