ACCT_assignment b and c - B) Internally generated goodwill...

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B) Internally generated goodwill is not recognized as an asset because it is not an “identifiable resource controlled by the entity that can be measured reliable at cost”, unless as part of an AASB 3 Business combination. This means a company may have extremely valuable goodwill, yet may be unable to show any value for the asset. However, advocates of the MCS method argue that “the balance sheet number…represents only 10% to 15% of the value of these companies”. They suggest that this does not meet SAC 2, requirements for users decision making. Therefore under the MCS method internally generated goodwill is permitted as part of the MCS statement. Goodwill under AASB 3 “cannot be individually identified … It cannot be purchased or sold separately, but only as part of an entity in its entirety”. Because goodwill is not separable it fails to meet the criteria provided in AASB 138, which requires that an intangible asset be identifiable as well as non monetary and non-physical in nature. Under the MCS method goodwill is permitted to be recorded but is taken off the balance sheet and instead is attributed to
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This note was uploaded on 03/05/2012 for the course ACCT 2542 taught by Professor Knapp during the Three '11 term at University of New South Wales.

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ACCT_assignment b and c - B) Internally generated goodwill...

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