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Valuation of Goodwill
Accountancy
I have shared the formula for Capita Employed which mentions that Goodwill should be minused from Total Assets. But why in example 15 the book has not minused Goodwill value while calculating Capital Employed ? Please reply clear my doubt anybody
Answers (5)
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Thread Starter
Ardhendu Sekhar AcharyaWhy ?
Goodwill will be subtracted from the total assets only if such goodwill is already appearing the balance sheet. In this instance Capital 350k + Reserves 60k + creditors 90k = Assets 500k, i.e. total of equity and liability = total assets. so there is no goodwill which is appearing in the books of the firm. Hence, such goodwill will not be deducted. Hope you understand.
Aswin Chandar
Goodwill will be subtracted from the total assets only if such goodwill is already appearing the balance sheet. In this instance Capital 350k + Reserves 60k + creditors 90k = Assets 500k, i.e. total of equity and liability = total assets. so there is no goodwill which is appearing in the books of the firm. Hence, such goodwill will not be deducted. Hope you understand.
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