ayodayo

Canadian Analyst,

The formula you have is correct for a company purchased at BV with no premium paid. mr. flinstones pointed out you have to account for that excess in purchase price and assign it to certain assets if possible. Once you've written up the assets to FV any remainder between the purchase price less the FV of net identifiable assets equals your goodwill. Because we're using the equity method there is no line item for GW on the BS.

Because some assets were marked up to FV when you invested into the company you now have to deduct your pro-rata share of excess depreciation from the income statement.



Edited 1 time(s). Last edit at Thursday, June 2, 2011 at 05:55PM by Chuckrox8.