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What is the treatment of Goodwill Arising on Amalgamation?

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What is the treatment of Goodwill Arising on Amalgamation?
posted Jun 19, 2017 by Tanmay

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1 Answer

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Goodwill arising on amalgamation represents a payment made inanticipation of future income and it is appropriate to treat it as an asset to be amortised to income on a systematic basis over its useful life. Due to the nature of goodwill, it is frequently difficult to estimate its useful life with reasonable certainty. Such estimation is, therefore, made on a prudent basis. Accordingly, it is considered appropriate to amortise goodwill over a period
--Factors which may be considered in estimating the useful life of goodwill arising on amalgamation include:
(a) the foreseeable life of the business or industry;
(b) the effects of product obsolescence, changes in demand and other
economic factors;
(c) the service life expectancies of key individuals or groups of
employees;
(d) expected actions by competitors or potential competitors; and
(e) legal, regulatory or contractual provisions affecting the useful life

answer Jun 20, 2017 by Vijay
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