Ad Code

Problems on Valuation of Goodwill

 

Problems with the Valuation of Goodwill

The first is the inability to calculate directly the net present value of all assets of the acquired firm. The composition of goodwill is such that it is difficult to identify the assets comprising it, and hence it is difficult to measure them as single assets.

In this method, the value of goodwill is calculated by dividing the average profit by the number of years purchased. The formula may be used to compute it. Goodwill is calculated by multiplying the average profit by the number of years after the acquisition.

Valuation of goodwill can present several problems, including:

Lack of market data: Goodwill is an intangible asset, and there is often a lack of market data available to use in valuing it.

Subjectivity in valuation methods: Different valuation methods, such as the income approach and the market approach, can lead to different valuations of goodwill and require the use of subjective assumptions.

Difficulty in determining the fair value of underlying assets: Goodwill is often calculated as the difference between the fair value of a company's assets and liabilities and its market value. Determining the fair value of the underlying assets can be difficult.

Impairment testing: Goodwill is subject to impairment testing, which requires companies to determine whether the carrying value of goodwill exceeds its fair value. This can be difficult, especially in cases where market conditions have changed significantly since the goodwill was acquired.

Changes in accounting standards: Changes in accounting standards, such as the new accounting standard IFRS 16, can lead to changes in the way goodwill is reported and valued.

Goodwill of acquired company: In case of an acquisition, the goodwill of the acquired company is calculated as the difference between the fair value of assets and liabilities and the consideration paid for the company. The fair value of assets and liabilities is also a subjective estimate.

Lack of comparability: Goodwill is often difficult to compare across companies or industries due to differences in the nature of the underlying assets and liabilities.

'Acharya Ramchandra Shukla' was born in 1884 in a village named Agona in Basti district, Uttar Pradesh, India. His father Pt. Chandrawali Shukla was a Sarayuparin Brahmin. He was a supervisor Kanungo and biased of Urdu. Shuklji had studied till the Intermediate. After this, he did the job. Then he left the job and became a teacher. He started writing in Hindi from his student life. Impressed by Shuklaji's ability, Nagari Pracharini Sabha, Kashi called him to work in the Hindi literature. Shuklaji was appointed Hindi teacher in Hindu University and later became the Head of Hindi Department. He died in 1941 AD. Following are the major compositions of Acharya Ramchandra Shukla- 'Charan Vinod', 'Radhakrishna Das', 'Chintamani Triveni', 'Surdas', 'Ras Mimamsa', 'History of Hindi literature' etc. He edited 'Bhramar Geetasar', 'Bharatendu Sahitya', 'Tulsi Granthavali' and 'Jayasi Granthavali'. The talent of Acharya Ramchandra Shukla Ji was multi-faceted. He was a great essayist, critic and thinker. He is considered the first basic critic of Hindi. His history of Hindi literature is considered to be superior in history. Acharya Ramchandra Shukla was the pride of Hindi. Full name of 'Dr. A.P.J. Abdul Kalam' was 'Dr. Avul Pakir Jainulabdeen Abdul Kalam'. He was born on October 15, 1931 at Dhanushkothi in the temple town Rameshwaram in Tamil Nadu. He was born in a poor family, but he was an exceptionally brilliant child. Kalam passed the B.Sc. examination from Saint Joseph College, Thiruchirapalli. He joined Madras Institute of Technology (MIT). His further knowledge in the field got upgraded when he joined Defense Research and Development Organization (DRDO) in 1958 and Indian Space Research Organization (ISRO) in 1963. He is known as the Missile Man of India. The various Indian Missiles of world order like Prithvi, Trishul, Akash, Agni, etc. are mainly the result of his efforts and caliber. Dr. A.P.J. Abdul Kalam became the 11th President of India. He served the country from 2002 to 2007. For his excellence and brilliance, he was awarded the prestigious Bharat Ratna in 1998; Padma Vibhushan in 1990; and Padma Bhushan in 1981. Dr Kalam expired on Monday 27 July 2015. He suddenly fell unconscious when he was delivering a lecture at the Indian Institute of Management at Shillong. On 30 July 2015, the former President was laid to rest at Rameswaram's Pei Karumbu Ground with full state honours. Over 350,000 people attended the last rites, including the Prime Minister, the governor of Tamil Nadu and the chief ministers of Karnataka, Kerala and Andhra Pradesh. Dr. A.P.J. Abdul Kalam was mainly interested in work. He was a bachelor. He was not interested in going abroad. He wanted to serve his motherland first. He said that he thinks his first and foremost duty is to serve his motherland. He was fond of music and the Koran and the Gita. Ever since becoming the head of the Indian State, he had been having interaction with children all over the country. He was by no means a miracle man. His advice to the youngster of the nation was to "dream dream and convert these into thoughts and later into actions".
Close Menu