Goodwill calc

Question 1

How is goodwill calc?

Answer 1

Goodwill is calculating the residual value between the FV in which the parent paid for the company and Subsidiary net assets valued at FV.

Question 2

How should PPE be valued if there is no market value

Answer 2

The depreciated replacement cost

Question 3

Intangible assets

Answer 3

FV if not the amount that reflects what the acquirer would have paid otherwise

Question 4

Inventories

Answer 4

Should be valued at selling price minus the sum of disposal cost and reasonable profit allowance

Question 5

Raw Materials

Answer 5

Should be valued at the replacement cost

Question 6

Receivables, payables and loans

Answer 6

Present value of future cash flows that you are expected to pay and receive.

Question 7

How is the Net assets calculated at acquistion

Answer 7

Share Capital and Retained earning + FV adjustments

Question 8

What not included in the cost of Goodwill

Answer 8

1) Cost of acquiring the company
2) Provisions for future losses for aquiring a company

Question 9

Value of parents consideration can be paid in multiple ways

Answer 9

1)Cash
2)Shares issues or deffered issues - MV of shares at aquisition date
3)Deferred cash paid - PV of amounts paid
4) Contingent consideration - Probability of weighted present value