An accounting process that involves allocating the purchase consideration's fair value between the underlying tangible and intangible net assets of a company being acquired.
Amortization is the process of gradually writing off the initial cost of an asset over a specific term or the repayment of debt in installments.
Amortization refers to the process of reducing debt through periodic payments or the systematic write-off of intangible asset costs over a set period.
Brands, as intangible assets, play a crucial role in a company's strategic differentiation and financial performance. The accounting treatment of brands varies globally and has evolved to address the complexity in valuing and amortizing these assets.
Business value encompasses the total worth of a business, considering both tangible and intangible assets. It represents the value above the mere physical assets, including elements such as goodwill and going-concern value.
A cash-generating unit (CGU) is a subset of assets, liabilities, and associated goodwill within a reporting entity that contributes to generating cash inflows in a largely independent manner from other parts of the organization.
Dangling debit is an accounting term describing a practice where companies wrote off goodwill to reserves, creating a goodwill account deducted from the total shareholders' funds; a practice discontinued under Financial Reporting Standard (FRS) 10.
The equity method is an accounting technique used to record investments in associated undertakings, reflecting the investor's share of the investee's net assets and performance.
A fictitious asset is an asset listed on a company's balance sheet that does not actually exist or has no real value. Such assets may appear due to error or as part of deliberate fraudulent activities.
A detailed overview of FRS 102, an accounting standard issued by the Financial Reporting Council in 2013 to supersede previous UK GAAP, bringing it in line with international standards.
Understanding the Importance of Going-Concern Value in Assessing a Company's Operating Worth.
Goodwill is an intangible asset reflecting a business's customer connections, reputation, and similar factors. It is the difference between the value of the separable net assets of a business and the total value of the business.
Impairment refers to the reduction in the recoverable amount of a fixed asset or goodwill below its carrying amount, often due to obsolescence, damage, or market value decline.
An impairment review is a critical process conducted by entities to assess whether the carrying amount of a fixed asset or goodwill may not be recoverable due to certain events or changes in circumstances.
Intangible assets represent non-physical assets that hold significant financial value for a company. This article explores their definition, examples, accounting treatment, and related standards.
Intangible value represents non-physical assets that have a significant impact on an entity's worth, such as goodwill, brand recognition, and intellectual properties like trademarks and patents.
Internally generated goodwill, also known as inherent or non-purchased goodwill, refers to the presumed value present in an existing business that has not been evidenced by a purchase transaction. According to Section 18 of the Financial Reporting Standard applicable in the UK and Republic of Ireland, and International Accounting Standard 38, such goodwill should not be recognized on the balance sheet.
Liquidating value refers to the projected price for an asset of a company that is going out of business, such as a real estate holding or office equipment. This value is often distinguished from the going-concern value, which may be higher due to factors such as organization value or goodwill.
A merger reserve, also known as merger capital reserve, is credited in place of a share premium account when merger relief is applied. Goodwill on consolidation may be written off against a merger reserve, unlike the share premium account.
Partnership accounts refer to the detailed accounting records maintained by a partnership, encompassing various essential documents such as the appropriation account, capital account, and current account. These accounts aid in the equitable distribution of profits and manage the financial dealings among partners in accordance with the partnership agreement.
Purchase accounting, also known as acquisition accounting, is the method used in financial accounting to consolidate the financial statements of two companies when one company acquires another. It involves revaluing the acquired company's assets and liabilities to fair value and recognizing goodwill, if any, in the consolidated financial statements.
In the USA, a method of accounting for business combinations in which cash and other assets are distributed or liabilities incurred. The purchase method is used if the criteria are not met for the pooling-of-interests method.
Purchased Goodwill represents the premium amount paid over the fair value of the identifiable net assets during the acquisition of a company, reflecting the value of the company’s brand, customer base, and other intangible elements.
Push Down Accounting refers to the practice in the USA of incorporating the fair value adjustments on acquisition, including goodwill, made by the acquiring company into the financial statements of the acquired subsidiary.
