Goodwill Is An Intangible Asset

1080 WordsJun 8, 20155 Pages
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. Goodwill is an intangible asset that is recognizable by it nonmonetary asset. Goodwill has no physical material or matter. Intangible asset are said to be either divisible or comes from contractual or other form of legal rights, which has the authority to gain future economic benefits. Although the procedures in this process can be difficult and is subjected to a great degree of interpretation. Even though the calculation that is required can be subjected to a guess. The new proposed treatment has been tackling with the problem of ambiguity and subjectivity aiming at the financial report preparers and auditors who will have some major implication regarding corporate governance and auditing. Goodwill, in the law and accounting, an intangible asset established a value over and above the valuation of the tangible assets of the
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