Valuation Of Goodwill In Accounting

Register to read the introduction… In accounting, goodwill is form of intangible asset measured like the difference between the purchased price of a company paid by acquirer and the sum of a fair value of the identifiable net assets of the acquired company at the date of acquisition. In business practice that is premium paid by acquirer over the net assets of an acquired company because of its reputation in the market, brand, high-quality management, expertise or know-how. Goodwill presents possibility for future growth and earnings, but the problem is that accounting is based on past information. Because of the problems associated with the valuation of goodwill numerous debates raised during decades and treatment of goodwill in accounting continues to change and evolve. The aim of this paper is to examine main changes in the treatment of goodwill before and after the adoption of the IFRS 3 – Business combinations in 2004. Paper focuses on the two main changes in the measurement of goodwill which have significant impact on financial position and result of the company. Therefore, initial recognition of goodwill and measurement after recognition are described in the period before 2004 and after it in order to make a comparison and conclusion whether those changes lead to a better measurement of …show more content…
Therefore this will remain controversial topic among economists until creators of financial standards find better solution for goodwill accounting.

Reference list

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