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Goodwill

CA. Roopali Kadam (Jobs on assignment basis.) (1453 Points)

04 June 2014

Do we have to consider "Goodwill Purchased" in computation of Capital Employed for Calculating Goodwill.

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9 Replies

CA ANKUSH AGGARWAL (CHARTERED ACCOUNTANT) (2782 Points)
Replied 04 June 2014

Nopes.....

1 Like

Mayank (CA) (54 Points)
Replied 04 June 2014

Yes u have to consider it

Prateek Sharma (student) (194 Points)
Replied 05 June 2014

Ya because capital employed =fixed assets + working capital so according to it we have to consider it as fixed assets.

Hajra (Consultant) (46 Points)
Replied 05 June 2014

Theoretically, If Capital Employed is being calculated for the purpose of valuation of Goodwill then it will not include Goodwill. This is because we require market value of Goodwill in capital employed & that i.s what we are calculating However, if Capital Employed is being calculated for the purpose of valuation of Shares ( NAV ) then it will include Goodwill.

2 Like

CA. Roopali Kadam (Jobs on assignment basis.) (1453 Points)
Replied 05 June 2014

In my reference book, Goodwill is to be valued for business valuation. In Balancesheet Question- has purchased Goodwill, & it is considered in Calculating Goodwill by Super profits method.

Is it right because business is getting valued.?

The Q. has come in CA Final exams of Nov 2003 & June 2009 for 16 Marks. Can any provide link to Solution?