It is the season for buying
IT is exactly two days before Christmas and everybody is in season gives each of us a reason to spend more than usual for When buying gifts, we normally have an idea of what to give and also reason why we choose to buy
A person planning to buy a gift is very similar to a company who There are very specific reasons why one would buy or take over a company and why a specific and more companies, big or small, - already in place, as well as personnel, customer base, and for some,
Buying an existing business might, indeed, be the fastest and easiest way for a company to - tion to account for, as it can also be to be addressed, such as, the valuation of the business that’s being only the business’s tangible assets - ment)? More importantly, when the company pays more than the how does the company account for the difference?
Similarly, when we buy gifts especially for our loved ones, we want to choose the best, and the best usually comes with a hefty price company pays an agreed amount or consideration in exchange for - or consideration is larger than the individual fair value of each of the - sumed, and this is where it becomes
In the olden days, the difference would automatically be treated to attribute any excess payment as goodwill based on the simple logic that the buying company is it will have from the current busi
However, nowadays, such accounting treatment is no longer accept the buying company might also be buying something without physical substance—intangible assets—which may, or may not be, recognized
That is why it is important to identify intangible assets, which may either be:
(a) separated and divided from sold, transferred, licensed, rented, or exchanged, either individually or together with another related contract, identifiable asset or liability, regardless of whether the buying company does not intend to sell, license, or otherwise exchange it; for example, a customer or subscriber list); or
(b) an existing contractual-legal relationship even if not transferable or separable from the selling company (for example, an existing non-transferable lease agreement that has favorable terms relative to market or a technology patent owned by the seller that has been licensed
Since it’s the season of shopping, let me illustrate further with Coach’s revenues and expand its market as Kate Spade has great reach across millennial custom - ness is in excess of the fair value of its assets and liabilities, Coach should assess if the premium is such as Kate Spade’s brand name and any existing distribution intangibles should be recognized as a separate asset at fair value if not previously valued in Kate of recognizing and measuring the buying company might end up liabilities assumed that the selling company had not previously - ments, such as brand name, pat
- gible assets, apart from goodwill, should also be valued before you can say that the remaining excess payment per
In the end, in any business ac mind that, although existing good relationships and reputation mean a lot, those are not the only things
This is also similar to giftgiving this season: the brand and cost of our gifts are not the thoughtfulness and the love that
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