student-goodwill(intangibles)


J

Janice Davis

Out of curiosity, how many of you, practicing public accounting, deal with goodwill on a regular basis? An example would be a current client coming into your office and saying they want to buy someone's business. Said client asks "How much should I pay for this?" My instructor's response is--"How quickly can you eliminate the customer list?" Of course, I understand that he is talking about the accountant figuring how much the client should pay, but not telling the client TO pay such and such; only advising him based on info given. I am really bad about explaining things so if you want a little more clarity just ask.

Janice
 
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A

Allan Martin

I do not understand what your instructor means by "How quickly can you eliminate the customer list?" ?


Out of curiosity, how many of you, practicing public accounting, deal with goodwill on a regular basis? An example would be a current client coming into your office and saying they want to buy someone's business. Said client asks "How much should I pay for this?" My instructor's response is--"How quickly can you eliminate the customer list?" Of course, I understand that he is talking about the accountant figuring how much the client should pay, but not telling the client TO pay such and such; only advising him based on info given. I am really bad about explaining things so if you want a little more clarity just ask.

Janice
 
J

John

maybe because the "customer list" is amortizable against earnings and goodwill is not.





I do not understand what your instructor means by "How quickly can you eliminate the customer list?" ?


Out of curiosity, how many of you, practicing public accounting, deal with goodwill on a regular basis? An example would be a current client coming into your office and saying they want to buy someone's business. Said client asks "How much should I pay for this?" My instructor's response is--"How quickly can you eliminate the customer list?" Of course, I understand that he is talking about the accountant figuring how much the client should pay, but not telling the client TO pay such and such; only advising him based on info given. I am really bad about explaining things so if you want a little more clarity just ask.

Janice
 
A

Allan Martin

Then the instructor would have said "Depends on the amount allocated to the customer list verse goodwiil", not "How quickly can you eliminate the customer list?"
maybe because the "customer list" is amortizable against earnings and goodwill is not.





I do not understand what your instructor means by "How quickly can you eliminate the customer list?" ?


Out of curiosity, how many of you, practicing public accounting, deal with goodwill on a regular basis? An example would be a current client coming into your office and saying they want to buy someone's business. Said client asks "How much should I pay for this?" My instructor's response is--"How quickly can you eliminate the customer list?" Of course, I understand that he is talking about the accountant figuring how much the client should pay, but not telling the client TO pay such and such; only advising him based on info given. I am really bad about explaining things so if you want a little more clarity just ask.

Janice
 
J

Janice Davis

Let me clarify a little. First the comment my instructor made is a half joking comment. But the thing he is trying to get across is that your client comes in with a piece of paper with a list of customers and some pieces of office furniture because the person who currently owns the business works out of home. Based on this "piece of paper" the client wants to know how much he should pay to own the company.

Janice
Then the instructor would have said "Depends on the amount allocated to the customer list verse goodwiil", not "How quickly can you eliminate the customer list?"
maybe because the "customer list" is amortizable against earnings and goodwill is not.





I do not understand what your instructor means by "How quickly can you eliminate the customer list?" ?


Out of curiosity, how many of you, practicing public accounting, deal with goodwill on a regular basis? An example would be a current client coming into your office and saying they want to buy someone's business. Said client asks "How much should I pay for this?" My instructor's response is--"How quickly can you eliminate the customer list?" Of course, I understand that he is talking about the accountant figuring how much the client should pay, but not telling the client TO pay such and such; only advising him based on info given. I am really bad about explaining things so if you want a little more clarity just ask.

Janice
 
S

Steve

That's why there are lots of consultants and business valuation software. -- and in there are messages asking about the valuation in buying and selling tax practices.




Let me clarify a little. First the comment my instructor made is a half joking comment. But the thing he is trying to get across is that your client comes in with a piece of paper with a list of customers and some pieces of office furniture because the person who currently owns the business works out of home. Based on this "piece of paper" the client wants to know how much he should pay to own the company.

Janice
Then the instructor would have said "Depends on the amount allocated to the customer list verse goodwiil", not "How quickly can you eliminate the customer list?"
maybe because the "customer list" is amortizable against earnings and goodwill is not.





I do not understand what your instructor means by "How quickly can you eliminate the customer list?" ?


Out of curiosity, how many of you, practicing public accounting, deal with goodwill on a regular basis? An example would be a current client coming into your office and saying they want to buy someone's business. Said client asks "How much should I pay for this?" My instructor's response is--"How quickly can you eliminate the customer list?" Of course, I understand that he is talking about the accountant figuring how much the client should pay, but not telling the client TO pay such and such; only advising him based on info given. I am really bad about explaining things so if you want a little more clarity just ask.

Janice
 
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C

Chris Luper

Out of curiosity, how many of you, practicing public accounting, =
deal with goodwill on a regular basis? An example would be a current =
client coming into your office and saying they want to buy someone's =
business. Said client asks "How much should I pay for this?" My =
instructor's response is--"How quickly can you eliminate the customer =
list?" Of course, I understand that he is talking about the accountant =
figuring how much the client should pay, but not telling the client TO =
pay such and such; only advising him based on info given. I am really =
bad about explaining things so if you want a little more clarity just =
ask.

Janice
I don't completely understand your question, but public accountants deal with
goodwill all of the time.

Before SFAS 141/142, purchase accounting procedures were typically to value
all of the "hard assets" at FMV and just plugged the remainder to Goodwill and
amortize over 15-20 years even though the goodwill was a "bucket" for a variety
of other intangible assets.

With the advent of non-amortizable Goodwill, the process has become more
onerous as companies identify and value a variety of intangible assets
(examples are order backlog, customer lists, trademarks, marketing programs,
etc.) and determine if these intangibles are amortizable or not. Anything that
cannot be identified is then placed in "goodwill". This amount is tested for
impairment yearly.
 
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J

Janice Davis

I don't completely understand your question, but public accountants deal
with
goodwill all of the time.

Before SFAS 141/142, purchase accounting procedures were typically to value
all of the "hard assets" at FMV and just plugged the remainder to Goodwill and
amortize over 15-20 years even though the goodwill was a "bucket" for a variety
of other intangible assets.

With the advent of non-amortizable Goodwill, the process has become more
onerous as companies identify and value a variety of intangible assets
(examples are order backlog, customer lists, trademarks, marketing programs,
etc.) and determine if these intangibles are amortizable or not. Anything that
cannot be identified is then placed in "goodwill". This amount is tested for
impairment yearly.
Chris, you have actually answered my question very succinctly. This was
really the answer I was looking for. Thank you.
Janice
 

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