goodwill - MID-SEMESTER EXAM [Semester 1, 2011] SUGGESTED...

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MID-SEMESTER EXAM [Semester 1, 2011] SUGGESTED SOLUTION TO WRITTEN QUESTION 10% Define goodwill and indicate how goodwill is measured. Identify two possible components of goodwill. Discuss whether goodwill is an asset. [ Word length: approximately 200 - 300 words] Goodwill is defined in AASB 3 as ‘an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognised’. Goodwill is the excess of the consideration transferred over the net fair value of the identifiable assets acquired and liabilities assumed. Goodwill is measured by deducting the acquirer’s interest in the net fair value of the acquiree’s identifiable assets and liabilities from the consideration transferred in the business combination. One of the components of goodwill is the fair value of the ‘going concern’ element of the acquiree’s existing business. This represents the ability of the acquiree to earn a higher return on an assembled collection of net
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goodwill - MID-SEMESTER EXAM [Semester 1, 2011] SUGGESTED...

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