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# Typically, the buyer wants to allocate as much of the purchase price as possible to assets with the fastest tax write-offs - that is, those with the shortest depreciation periods. # For this reason, the buyer generally wants to attribute most of the price to business equipment and fixtures. Usually equipment and fixtures can be depreciated over three, five, seven or 10 years. # The buyer also generally wants to assign smaller values to intangible assets, because they have a long tax write-off period, 15 years. # Goodwill may not be amortized, so a buyer emphatically will want to allocate the minimum amount to goodwill. ## Still, in transferring a trademark, goodwill must be specifically transferred as well or the trademark will be lost - so something must be allocated to goodwill.

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Is goodwill a fixed asset or fictitious asset?

Goodwill in an intangible asset. It can be purchased or internally-generated. Purchased goodwill can occur when a businesses purchases a company's assets for more than their fair value. Internally-generated goodwill can arise for a few reasons, such as the fact that a company develops a reputation in the industry and in the market. Such a factor is an asset to the company, but is not tangible. I believe accounting principles are fairly restrictive on this type of goodwill.


What is the value of goodwill Upon liquidation?

There is no value of goodwill upon liquidation as business has no cutomer base and company is going to be liquidated in this case assets have lower value and there is no chance for goodwill of business.


Why is goodwill recorded at market value?

Goodwill occurs when one company acquires another, but pays more than the fair market value of the net assets. When one company acquires another, the goal is to increase the value of the company as a combined firm. The price the buyer pays will tend to exceed the total market value of the acquired company. The difference between the market value and the price paid is referred to as goodwill, and needs to be known in order to keep the books balanced for the company. Goodwill is classified as an intangible asset on the balance sheet.


What is goodwill impairment?

Answer - Goodwill impairment occurs when the value of the goodwill of a business unit declines to an amount less than the carrying value of the goodwill on the company's books. With the adoption of SFAS 142 by the Financial Accounting Standards Board (FASB), audited companies are now required to test goodwill annually for impairment. This testing is done by valuing the business unit having the goodwill.


Why is goodwill account debited when company issues shares to promoters?

Promoters are the pioneer investors of a company. It can be said that due to the promoters the company has come this far. So, promoters do deserve some credibility and they get goodwill. Goodwill is debited and the promoters capital is credited. Thus, the promoters don't bring in cash for their increased share. But if, the goodwill has already been created before and the promoters have got their share, promoters need to bring cash for additional share.

Related Questions

What is a good company for video conferencing equipment.?

Polycom is the most popular company for purchasing video conferencing equipment. They have a variety of products, many of which have received high reviews.


What downsides are there in purchasing used test equipment opposed to purchasing it new?

The biggest downside in buying used equipment as opposed to new is that you are taking a huge risk. A used product may not necessarily work, while a new product that comes from the company is guaranteed to.


Where can one find financing for heavy equipment?

Portman Asset Finance are a company who assist businesses in the construction industry, including finance options for purchasing heavy equipment. An alternative company offering similar services is Machinery Trader.


Is goodwill a fixed asset or fictitious asset?

Goodwill in an intangible asset. It can be purchased or internally-generated. Purchased goodwill can occur when a businesses purchases a company's assets for more than their fair value. Internally-generated goodwill can arise for a few reasons, such as the fact that a company develops a reputation in the industry and in the market. Such a factor is an asset to the company, but is not tangible. I believe accounting principles are fairly restrictive on this type of goodwill.


What is the difference between goodwill and image of the organization?

Whereas brand image of the product of company is separate, goodwill of the company can be quantified and valued at by Valuers and are placed in the Asset side of the Balance Sheet of the Company.


Is goodwill a fixed asset or ficti tious asset?

Goodwill in an intangible asset. It can be purchased or internally-generated. Purchased goodwill can occur when a businesses purchases a company's assets for more than their fair value. Internally-generated goodwill can arise for a few reasons, such as the fact that a company develops a reputation in the industry and in the market. Such a factor is an asset to the company, but is not tangible. I believe accounting principles are fairly restrictive on this type of goodwill.


Why is goodwill important for the success of a company?

There are many reasons why goodwill is important in business. Goodwill will increase your customer base and retain old clients, attract investors and attract future buyers.


What is the value of goodwill Upon liquidation?

There is no value of goodwill upon liquidation as business has no cutomer base and company is going to be liquidated in this case assets have lower value and there is no chance for goodwill of business.


What is meant by the term goodwill?

Goodwill is an asset on the balance sheet. It is created when a business is purchased, if the buyer is willing to pay more for the business than the fair market value of the assets such as inventory and equipment. The buyer might be willing to pay more because an existing business may have * built up a good reputation, * skilled and trained staff, * profitable existing relationships with suppliers and vendors. In other words, there may be a huge advantage to get into business without having to start from scratch. That advantage is something many business-buyers will pay for. When starting the new company, we have to account for the entire purchase price. Example: Buy a company for $100,000. Inventory is worth $50,000. Equipment is worth $30,000. You are willing to pay an extra $20,000 not to have to start from scratch, to get the advantage of reputation, workforce and business relationships. Your starting entry will be something like this: Inventory $50,000 Equipment $30,000 Capital $100,000 You start out 'out-of-balance' unless you also account for the reputation/ work force/ relationships you bought. We call that 'Goodwill'. And now it balances: Inventory $50,000 Equipment $30,000 Goodwill $20,000 Capital $100,000 Goodwill is shown in 'Other Assets' on the Balance Sheet. When you see 'Goodwill' you know the business has changed hands. Goodwill is handled differently in different countries.


Where could I buy or rent magnetic locator equipment in LA?

You can try purchasing or renting them from Northern Tool. You can also try a company called Pump Zone.


Goodwill journal entries?

Goodwill is recorded in the accounting records when a company purchases another company for a price exceeding the fair value of its identifiable net assets. The journal entry to record goodwill involves debiting the Goodwill account and crediting the corresponding payment accounts like Cash or Accounts Payable. Each year, companies must perform impairment tests on goodwill and adjust the carrying value if necessary through a journal entry that debits the Goodwill Impairment Loss and credits the Goodwill account.


Why is goodwill recorded at market value?

Goodwill occurs when one company acquires another, but pays more than the fair market value of the net assets. When one company acquires another, the goal is to increase the value of the company as a combined firm. The price the buyer pays will tend to exceed the total market value of the acquired company. The difference between the market value and the price paid is referred to as goodwill, and needs to be known in order to keep the books balanced for the company. Goodwill is classified as an intangible asset on the balance sheet.