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Effect of Proposed Dividend in valuation of Goodwill

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Article Trainee
97 Points Posted on 17 February 2020
In valuation of goodwill,
Proposed dividend to equity & preference shares is to be deducted from assets or not ?
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On 17 February 2020 at 15:25 Report
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Student
559 Points Posted on 17 February 2020
Pre acquisition dividend is deducted from the Cost of Investment to calculate Goodwill or capital reserve.....Proposed dividend need not be made for any kind of adjustment in calculating goodwill....
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On 17 February 2020 at 21:24
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Article Trainee
97 Points Posted on 17 February 2020
Thanks for reply, but I think you have given answer from consolidation point of view and I have confusion from valuation point of view, i.e. valuation of Goodwill...
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On 17 February 2020 at 21:33
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Student
559 Points Posted on 22 February 2020
Dividend declared is not to be treated as an outside liability(I mean it is liability towards owners/shareholders).., so it need not be deducted in calculating goodwill...,However., if you are deducting Preference share capital., you need to deduct preference dividend also...
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On 22 February 2020 at 21:47


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