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hi whts the difference between goodwill and internally generated goodwill
brand name and internally generated bnrand name
internally generated intangibles
m stuck to point internally generated how do these generate internallyBy developing your own goodwill. But you can’t recognise it. It only becomes accountable / recordable / recognisable when it’s bought / sold
Is that ok or do you need more?
m extremelyyy thnkful t0 you my problem is solveddd and one more question
internally generated intangibles or brand name name should charged to P/L as an expense
should we charge internally developed goodwill to P/L as expense as it is n0t recognized as intangible asset
and how do we purchase goodwill i know the treatment it should be recorded at MV but h0w d0 we purchase it? thnxx in advance“internally generated intangibles or brand name name should charged to P/L as an expense” – no, how can you charge a brand name to statement of profit or loss if you haven’t recognised it as an asset in the first place?
When Kit-Kat were developing their brand, any costs involved in bringing the brand name to the attention of the public and any expenses incurred in marketing the product were certainly expensed through statement of profit or loss – is that what you mean?
“how do we purchase goodwill i know the treatment it should be recorded at MV but h0w d0 we purchase it?” – by buying another company and paying more than your share of the fair valued net assets.
This is a basic consolidation question!
Hello sir!
How do you deal with this qn below:The intangible asset in the trial balance ($14000) represents the R & D of a new product,Citra. The project began on 1/4/20X4 and costs were incurred evenly over 7 months up to 31/10/20X4,when the product was launched.
Initially the directors of Halpert were unsure whether to proceed, but following successful tests in 20X4, the approval to develop Citra was given on 1/7/20X4. It is anticipated that Citra will last for 5 years.Do you take $14000/5= 2800 in P/L and 11200 (14000-2800) in SFP?
This looks to me like expenditure of $2,000 per month for each of 7 months
The project was started on 1 April, 2014 and, on 1 July, 2014, the project was determined to be viable so, from that date, project costs should be capitalised
April through June is 3 months @ $2,000 = $6,000 to be expensed through Statement of Profit or Loss
July through October is 4 months @ $2,000 + $8,000 should be capitalised and amortised over 5 years from 1 November, 2014
Clear?
I’ve looked again at my response and can see no way that you could be confused!
Maybe if you forget entirely the bit in the question “It is anticipated that Citra will last for 5 years.” – that is totally irrelevant to finding the solution
Other than that I can only suggest that you be specific about exactly which part of my explanation you are not happy with
Oh. I get it now, you expensed the (2000*3) $6000 because it was a part of research costs and research costs need to be expensed to p/l. Isn’t it?
Thereafter, from 1/7/20×4 Citra was given the approval to develop. So it should be capitalised as development costs as $10,000.
And do you take amortisation expenses to p/l? 10000/5=2000?“So it should be capitalised as development costs as $10,000” – since when has 4 x $2,000 been equal to $10,000?
“And do you take amortisation expenses to p/l? 10000/5=2000?” – you do, but beware that the first accounting period may not be a full year
The ANNUAL charge for amortisation would be $8,000 / 5 years = $1,600
IF the year end is 31 December, then the first amortisation expense for the year ended 31 December, 2014 would be for only 2 months so 2 / 12 x $1,600 = $2,667
After that it would be $1,600 per annum until fully amortised
OK?
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