Internally generated goodwill

vandhana.gopalakrishnan
Posts: 5
Joined: Tue Jul 17, 2012 12:31 pm

Internally generated goodwill

Postby vandhana.gopalakrishnan » Tue Aug 28, 2012 7:41 pm

What is internally generated goodwill ?

Is it treated as an asset ? Where does it fit in the balance sheet ?

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akshat
Good Student
Posts: 10
Joined: Wed Aug 22, 2012 11:53 am

Re: Internally generated goodwill

Postby akshat » Fri Aug 31, 2012 11:42 am

Creating brand value/image, customer relationships and creditor trust etc. during the course of the business, is called Internally generated goodwill.

Internally generated goodwill shall not be recognised as an asset.

The costs incurred towards generating goodwill internally are shown as expenses on the balance sheet, as and when they are incurred.

gdeepak1984
Posts: 2
Joined: Tue Sep 25, 2012 4:49 pm

Re: Internally generated goodwill

Postby gdeepak1984 » Mon Oct 15, 2012 10:22 am

Shall it be recorded as an expense in B/S or Income statement ?

pankaj
Finance Junkie
Posts: 61
Joined: Fri Aug 03, 2012 11:24 am

Re: Internally generated goodwill

Postby pankaj » Tue Oct 16, 2012 11:38 am

Internally generated goodwill cannot be explicitly stated in the balance sheet. Goodwill created only in the business acquisition (price paid more than the identifiable net assets) is reported in the balance sheet.

Internally generated goodwill are creating during the course of the business (brand value/image, customer relationships and creditor trust etc.). The treatment of this goodwill only changes if the company is acquired, converting the goodwill from internally-generated to acquired.

The costs/expenses incurred towards brand value etc (internally generated intangibles, goodwill)are shown as expenses in the income statement, as and when they are incurred.

Hope this helps!


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