Goodwill - over FMV or NBV

[oldmonk]

As i understand, Goodwill is acquisition price over fair value of an asset.

But in one of the questions i came across (made a mental note but can't remember where), it was calculated as acquistion over NBV if the costs can't be assigned anywhere else.

Can anybody shed any light on this.......

 

[daj224]

what r you asking

GW is a plug accountant use when a firm buys another and doesn't know how to account for the excess over the net assets of the target.

i have $5.

you own a lemon stand with a book val of 3. you have a custimer list i want that is worth $1 accdg to my accountant your assets are worth 4. I pay 5 becuase i have to reward your earlier investors.

plug is 1.

Gwill = 1.

boom

 

[oldmonk]

Thats what I understand...if I value it at 4, then goodwill is 1.

okay spent some time and found the question, sample exam 3, question was something like this...where a company values an acquired firm's R&D and the excess over NBV was accounted as goodwill.

There was no mention of fair value and I got that answer wrong. The feedback says, excess over NBV is goodwill.

 

[oldmonk]

oldmonk Wrote:
-------------------------------------------------------
> Thats what I understand...if I value it at 4, then
> goodwill is 1.
>
> okay spent some time and found the question,
> sample exam 3, question was something like
> this...where a company values an acquired firm's
> R&D and the excess over NBV was accounted as
> goodwill.
>
> There was no mention of fair value and I got that
> answer wrong. The feedback says, excess over NBV
> is goodwill.



Q 37, samp exam 3