ACCA FR Syllabus B. Accounting For Transactions In Financial Statements - Goodwill v Other intangibles - Notes 3 / 5
Goodwill is calculated as follows:
| FV of Consideration | X |
| NCI | X |
| FV of Net Assets Acquired | (X) |
| Goodwill | X |
|---|
Goodwill may be due to:
Reputation for quality or service
Technical expertise
Possession of favourable contracts
Good management and staff
Negative goodwill
If the difference above is negative, the resulting gain is recognised as a bargain purchase in the statement of profit or loss
Goodwill v Other intangibles
Main differences
It cannot be valued on its own
Goodwill cannot be disposed of as a separate asset
The factors contributing to the value of goodwill cannot be valued
The value of goodwill is volatile