This report delves into the accounting treatment of goodwill, an intangible asset reflecting a company's reputation. It begins by defining goodwill and explaining its significance in financial statements. The report outlines the calculation of goodwill, particularly in the context of business acquisitions, where it represents the difference between the purchase consideration and the fair value of identifiable net assets. It further discusses the reporting of goodwill under the "Intangible Assets" section, including the annual impairment testing requirement. The report includes an acquisition analysis, demonstrating the calculation of goodwill and the related journal entries, such as those for patent valuation, deferred tax liabilities, and business combination revaluation reserves. It also provides pre-acquisition entries and amortization and depreciation entries. References from Corporate Finance Institute and ACCA Global are included to support the content.
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