All categories

3 years ago

What is goodwill in a business sale and why is it amortized in the business financial statements

Business

1 answer:

astra-53 [7]3 years ago

7 0

Answer:

See below

Explanation:

Goodwill arises when is a business is acquired as a going concern. It is an intangible asset of a business. Goodwill represents the value of a company's customer base, its location, any patents, and the brand name. It consists of the value of suppliers, customers, and employee relationships that facilitates the smooth running of the business.

The value of goodwill is the difference between the purchase price and the net cost of its tangible and other intangible assets of a business. Amortization of goodwill means spreading the cost of goodwill to several financial years.

Goodwill is amortized because the business benefits from the goodwill for many years. In other words, the expenditure on goodwill will profit the company in more than one financial year. As per the matching principle, expenses and incomes should be recognized in the period they occur. As benefits will be enjoyed in many years, the expenses should also be spread in similar years.

You might be interested in

Which statement about portfolio diversification is correct?

mario62 [17]

Answer:

C. As more securities are added to a portfolio, total risk typically would be expected to fall at a decreasing rate.

Explanation:

Portfolio diversification gives more security to a portfolio, which expected to results in a decreasing rate of total risk.

The portfolio which is diversified carries the co-variance measure of risk. It has the property of reducing the risk as it diversifies the portfolio to a great extent.

It reduces the overall risk by diversifying the assets i.e. stock , bonds, commodities etc.

Hence, the most appropriate answer is option C.

8 0

2 years ago

How much does a pediatrician make in a month?

Sati [7]

they make 135000 a month

3 0

2 years ago

Identify the following characteristics as primarily related to financial accounting (FA) or managerial accounting (MA):1. Help

DaniilM [7]

Answer:

Financial accounting is the aspect of accounting that is concerned with the summary, analysis and reporting of financial transactions related to a business.

While managerial accounting is the aspect of accounting that is concerned with the identification, measurement, analysis, and interpretation of accounting information to help managers plan for the future, make decisions for the company, and determine if their plans and decisions were accurate and efficient.

1. Helps Creditors make lending decisions is related Financial Accounting.

2. Helps in planning and controlling operations is related to Managerial Accounting.

3. Is not required to follow GAAP is related to Managerial Accounting.

4. Has a focus on the future is related to Managerial Accounting.

5. Summary reports prepared quarterly or annually is related to Financial Accounting.

6 0

3 years ago

slader Each month Leo must make copies of a budget report. When he uses both the large and the small copier, the job takes 30 mi

storchak [24]

Based on the time it takes Leo when he uses two machines, the length of time it will take if the large copier is broken is <u>75 minutes. </u>

<h3>How long will it take if the large copier is broken?</h3><h3 />

This can be found by the formula:

= 1 / ( (1 / time taken with both copiers) - (1 / time taken with large copier) )

Solving gives:

= 1 / ( ( 1 / 30) - (1 / 50))

= 1 / (1 / 75)

= 75 minutes

Find out more on budget reports at brainly.com/question/25812320.

7 0

2 years ago

Prepare journal entries for each transaction listed. (If no entry is required for a transaction/event, select "No journal entry

Karolina [17]

Answer:

The journal entries are as follows:

(i) (a) Under allowance for doubtful account method:

Allowance for doubtful accounts A/c Dr. $13,300

To accounts receivable $13,300

(To record the bad debts written off)

(b) Under direct write off method:

Bad debt expenses A/c Dr. $13,300

To accounts receivable $13,300

(To record the Bad debts written off)

(ii) Bad debts expenses A/c Dr. $15,300

To Allowance for doubtful accounts $15,300

(To record the bad debt expense)

6 0

3 years ago