ACCT2542 - Martin Bloom Accounting for goodwill The value...

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Martin Bloom Accounting for goodwill The value of intangible assets within the modern business environment is a major constituent to a company’s market capitalisation. In the presentation of information to stakeholders, it is critical that internally generated goodwill should not be disregarded due to its composition in the value of a business. The historically cost system is incompatible with the admission of goodwill entries, and becoming redundant due to a shift of focus of accounting in value to fair value. Under current standards, goodwill impairment on goodwill is irreversible, even when future economic benefits can be attributable to it. Furthermore, the impairment of goodwill is based on uncertain forecasts and allocated to CGUs, affecting the valuation of tangible assets. A more complete and accurate view of a business’s financial and economical position can be obtained by accounting for goodwill in and of itself, relative to market determinations in a MCS. This allows net tangible assets to be unaffected by impairment losses to goodwill,
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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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