tailieunhanh - Lecture Intermediate accounting (Volume 1, 11th Canadian edition) – Chapter Appendix 12: IntangiblE assets and goodwill

Lecture Intermediate accounting (Volume 1, 11th Canadian edition) – Chapter Appendix 12: Intangible assets and goodwill. After studying this chapter, you should be able to explain and apply basic approaches to valuing goodwill. | 1 CHAPTER 12: INTANGIBLE ASSETS & GOODWILL 2 2 CHAPTER 12: Intangible Assets and Goodwill After studying Appendix 12A, you should be able to: Explain and apply basic approaches to valuing goodwill. 3 3 Appendix 12A – Valuing Goodwill When one entity acquires 100% of another business, there is the potential of goodwill Goodwill is equal to the excess of the fair value of the consideration given up by the acquirer over the fair value of the identifiable assets acquired and liabilities assumed in the business acquisition 4 LO11 4 Appendix 12A – Valuing Goodwill Excess Earnings Approach One method used to estimate the amount of goodwill in a business is the excess-earnings approach This is a systematic and logical way to calculate goodwill because its value is directly related to what makes a company worth more than the sum of its parts 5 LO11 5 Appendix 12A – Valuing Goodwill Excess Earnings Approach The steps to estimate the value of goodwill using the excess-earnings approach are: Calculate the average annual earnings the company is expected to earn in the future Calculate the average earnings that the company would be expected to earn if it generate the same return on investment as the average firm in the same industry Calculate the excess annual earnings Estimate the value of the goodwill based on the future stream of excess earnings 6 LO11 6 Appendix 12A – Valuing Goodwill Discount Rate The choice of discount rate is relatively subjective The lower the discount rate, the higher the goodwill The higher the discount rate, the lower the goodwill Capitalization @ 25% Excess Earnings / Capitalization Rate = $21,500 / = $86,000 Capitalization @ 15% Excess Earnings / Capitalization Rate = $21,500 / = $143,333 7 LO11 7 Appendix 12A – Valuing Goodwill Discount Period Determining the period over which excess earnings are expected to continue is perhaps the most difficult problem in estimating goodwill Goodwill is assumed to be indefinite where as excess earnings | 1 CHAPTER 12: INTANGIBLE ASSETS & GOODWILL 2 2 CHAPTER 12: Intangible Assets and Goodwill After studying Appendix 12A, you should be able to: Explain and apply basic approaches to valuing goodwill. 3 3 Appendix 12A – Valuing Goodwill When one entity acquires 100% of another business, there is the potential of goodwill Goodwill is equal to the excess of the fair value of the consideration given up by the acquirer over the fair value of the identifiable assets acquired and liabilities assumed in the business acquisition 4 LO11 4 Appendix 12A – Valuing Goodwill Excess Earnings Approach One method used to estimate the amount of goodwill in a business is the excess-earnings approach This is a systematic and logical way to calculate goodwill because its value is directly related to what makes a company worth more than the sum of its parts 5 LO11 5 Appendix 12A – Valuing Goodwill Excess Earnings Approach The steps to estimate the value of goodwill using the excess-earnings approach are: .

• Kế toán - Kiểm toán
• Intermediate accounting
• Lecture Intermediate accounting
• Financial reporting
• Intangible assets
• Internally developed intangibles
• Development costs
• Financial Accounting
• Accounting process
• Accounting equation
• Accounting processing cycle
• Stock issuance
• Estimating reserves
• Liquidating dividends
• Accounting changes
• Error corrections
• Accounting choices
• Theoretical structure
• Accrual accounting
• Financial accounting environment
• Accounting for leases
• Leasing environment
• Accounting by lessee
• Special accounting problems
• Cash versus accrual accounting
• International standard setting
• Accounting standards
• Accounting assists
• The challenges facing accounting
• Income taxes
• Accounting for income taxes
• Deferred tax liabilities
• Error analysis
• Accounting policy
• Accounting estimate
• Accounting policies
• Accounting information system
• Measurement issues
• Characteristics of accounting
• Capital allocation process