Goodwill

Question 1

Goodwill (Definition)

Answer 1

• Intangible resource that cannot be separately identified and reported in the B/S
• Excess of FV of sub (purchase price) over FV of subs assets. = equity method

Question 2

Goodwill Acquisition Method

Answer 2

Purchase Price + NCI

- FV assets

Question 3

IFRS Goodwill

Answer 3

Full goodwill = US GAAP = FV sub - FV sub assets

Partial Goodwill = Acquisition - FV of subs net assets acquired

Question 4

Maintaining Goodwill Cost

Answer 4

Not Capitalize - Instead Expense as incurred

Also - internally developed good will is not capitalized

Question 5

Goodwill recognized at (US GAAP vs IFRS)

Answer 5

US GAAP - recognized at reporting unit level (operating segment)
IFRS - recognized at cash generating level

Question 6

Qualitative Evaluation of Goodwill Impairment (US GAAP)

Answer 6

Macroeconomic conditions, financial performance, industry/market conditions, entry specific events (bankruptcy, litigation, change in mgmt) - Quantitative Assessment not necessary if qualitative characteristic lead to a more likely than not the FV is less then CV

Question 7

Quantitative Evaluation of Goodwill Impairment (US GAAP)

Answer 7

Step 1 = FV < CV
Step 2 = FV broke out by identifiable & unidentifiable — unidentifiable = max goodwill
Previous good will - max = adjustment (I/S continuing operations)

Question 8

Private Company Goodwill

Answer 8

Public Goodwill is not amortized, but rather can be impaired.
Private Goodwill can be amortized of 10 yr sl

Question 9

IFRS Evaluation of Goodwill Impairment

Answer 9

CV > Recoverable Cost

Recoverable Cost = greater of value in use or fv - cost to sell

Note IFRS allows re-valutation (if active market)