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# calculate goodwill - PowerPoint PPT Presentation

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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## PowerPoint Slideshow about 'calculate goodwill' - Pat_Xavi

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Presentation Transcript
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

Calculate Goodwill

We calculated this in Step 2

We calculated this in Step1

Calculate Goodwill

Click on the mouse to find out

What does goodwill represent?

When Burgers Ltd acquires Pizza Ltd, it may also acquire

• Loyal customers of Pizza Ltd

• Experienced Staff of Pizza Ltd

In addition, it may experience benefits relating to economies of scale.

End Step 3