Goodwill Flashcards
1
Q
How to calculate Goodwill?
A
Fair Value surrendered by parent minus Fair value of all identified assets and liabilities
2
Q
Goodwill
A
Has an indefinite life
No Longer Amortized
Recorded as intangible asset on consolidated balance sheet
And should be tested each year for impairment (written down if impaired)
3
Q
Impairment test for goodwill
A
Compare Fair Value with Book Value. (impaired if BV is > than FV)
4
Q
More likely than not “Test”
A
More likely than not (>50%) FV exceeds cost = No impairment test is needed.
5
Q
Bargain Purchase
A
Company is worth more than what was paid for it.
Recognized immediately as a Gain
