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Unformatted text preview: *Goodwill can only be recorded if a compay goes out and buys another company and pays some excess amount for it >>Only record GW when an entire entity is purchased GW = Purchase price for the entity - FMV of the entity's net identifiable assets Example: Co. A acquired Co. B for $3,000,000 cash. Co. A had net identifiable assets with a FMV of $4,500,000, and liabilities of $2,100,000. Co. A's J/E Identifiable Assets 4,500,000 Goodwill (plug) 600,000 Liabilties 2,100,000 Cash 3,000,000 Impairment of Intangibles 1) Specifically identifiable intangibles with definite lives: *Amortize *Test for impairment when indicated by circumstances 2) Specifically identifiable intangibles with indefinite lives: *Don’t amortize *Test for impairment annually 3) Goodwill *Same as #2 above, but the impairment calculations are different...
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This note was uploaded on 02/22/2012 for the course ACCT 1310 taught by Professor Staff during the Fall '10 term at Texas State.
- Fall '10