Accounting for
Goodwill
Walden University
ACCT 6140 ACMG 6140: Current Trends in Accounting
Standard
14:25:02 GMT -05:00
, Evaluating goodwill is very challenging but is a very critical skill for any investor.
Accounting for goodwill is that goodwill is not subject to amortized but is analyzed yearly for
impairment. Goodwill occurs when one company purchases another company and merges into
one company. The goodwill is recorded on the purchasing company's balance sheet. The
purchaser records the goodwill value, and what to record is the difference between the purchase
price and the fair value of the asset fewer liabilities. If the difference in the fair value of the
asset and liabilities is less than the purchase price, then that's a good acquisition. If the asset or
fair value is more than the purchasing price, it's a bargain in a distress sale (Investopedia).
This paper will further discuss how companies account for and apply goodwill by using an article
called Talbots Inc. and Subsidiaries: Accounting for Goodwill" (Bruns, 2008). By using the said
article, it will answer the following question:
1. What is the relevant accounting research question relating to Talbots goodwill?
2. To answer the accounting research question, what accounting standards must be used?
3. To answer the research questions, what needs to be known, estimated, and assumed
relates to the question
4. Is Talbots' accounting for goodwill appropriate, and is it possible to arrive at an
alternative accounting treatment?
Talbots Inc. was an international retailer, especially for women's apparel, shoes, and
accessories. On May 3, 2006, Talbots Inc. acquired J.Jill. J.Jill is another multi-channel
specialty retailer for women's apparel. Both companies sell their products under brand names,
and both made sales exclusively using their catalogs and websites. Their customer target is
women aged
14:25:02 GMT -05:00
Goodwill
Walden University
ACCT 6140 ACMG 6140: Current Trends in Accounting
Standard
14:25:02 GMT -05:00
, Evaluating goodwill is very challenging but is a very critical skill for any investor.
Accounting for goodwill is that goodwill is not subject to amortized but is analyzed yearly for
impairment. Goodwill occurs when one company purchases another company and merges into
one company. The goodwill is recorded on the purchasing company's balance sheet. The
purchaser records the goodwill value, and what to record is the difference between the purchase
price and the fair value of the asset fewer liabilities. If the difference in the fair value of the
asset and liabilities is less than the purchase price, then that's a good acquisition. If the asset or
fair value is more than the purchasing price, it's a bargain in a distress sale (Investopedia).
This paper will further discuss how companies account for and apply goodwill by using an article
called Talbots Inc. and Subsidiaries: Accounting for Goodwill" (Bruns, 2008). By using the said
article, it will answer the following question:
1. What is the relevant accounting research question relating to Talbots goodwill?
2. To answer the accounting research question, what accounting standards must be used?
3. To answer the research questions, what needs to be known, estimated, and assumed
relates to the question
4. Is Talbots' accounting for goodwill appropriate, and is it possible to arrive at an
alternative accounting treatment?
Talbots Inc. was an international retailer, especially for women's apparel, shoes, and
accessories. On May 3, 2006, Talbots Inc. acquired J.Jill. J.Jill is another multi-channel
specialty retailer for women's apparel. Both companies sell their products under brand names,
and both made sales exclusively using their catalogs and websites. Their customer target is
women aged
14:25:02 GMT -05:00
