Step 3. Calculate Goodwill. To calculate goodwill, we compare Cost of Acquisition (from Step 2) with Fair Value of Identifiable Net Assets Acquired (from Step 1) If COA > FV of INA We must recognise Goodwill. If COA < FV of INA, we will recognise an item of Revenue, known as Excess.
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To calculate goodwill, we compare
If COA > FV of INA
If COA < FV of INA, we will recognise an item of Revenue, known as Excess
We calculated this in Step 2
We calculated this in Step1
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What does goodwill represent?
When Burgers Ltd acquires Pizza Ltd, it may also acquire
In addition, it may experience benefits relating to economies of scale.
End Step 3