Goodwill Essay Example | Topics and Well Written Essays - 500 words

Goodwill - Essay usePooling of Interests or Purchase Accounting Method. Under the first method, the Goodwill acquired on account of nuclear fusion and acquisitions use to get amortized in equal installments over a period of 40 years. Under the second gear method, the Goodwill was considered as a permanent asset, which would not reduce in value with the passing of years, therefore enabling the companies to test the same for injury on an annual basis in order to visualize that fair value of the Goodwill was equal to its book value. Apart from the annual review, the impairment could also be exercised in instances where it indicated that the carrying amount of Goodwill needs reassessment.The process of assessment of impairment consists of two steps. Firstly it involves comparability of the intrinsic value of a business with its carrying amount including the Goodwill. Incase the book value exceeds the fair value, then nothing needs has to be done. On the other hand, if the fair val ue is lesser than the book value, impairment would be carried out. Under the US GAAP, the fair value of Goodwill is calculated by allocating fair determine to unit assets and liabilities. In the case of impairment of Goodwill, same should be charged to the Profit and Loss Account. The international Accounting Standards also followed the footsteps of US GAAP concept.The basic difference between the UK and the International Accounting Standards is that in the former the Companies were allowed to opt either of the two op