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If the goodwill is in the SOFP then we have to consider it during Asset based Valuation right?
However would you suggest to ignore it during Asset based Valuation for asset stripping or liquidation?
(Considering that goodwill is of no relevance since firm isn’t a going concern anymore)
Firstly, goodwill should not appear in the SOFP according to Accounting Standards (unless it was purchased goodwill), and even if it did appear, we would never just take the book value.
It would be ignored anyway if it was assets stripping or liquidation, but even if it was a takeover situation (and therefore goodwill is relevant) any exam question would tell you how it was to be valued.
Glad to know that exam question will
perhaps specify how to value..
Thanks alot. 🙂
You are welcome 🙂