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Calculate Goodwill

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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Calculate Goodwill

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  1. 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

  2. Step 3 Calculate Goodwill We calculated this in Step 2 We calculated this in Step1

  3. Step 3 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

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