Asked by Natalia Montenegro on Jun 18, 2024
Verified
Explain why the existence of goodwill enables an entity to generate higher future cash flows or profits than would otherwise occur.
Future Cash Flows
Estimates of the amount of money that is expected to be generated or expended by a business in future periods from its operational activities.
Goodwill
A non-physical asset that is recognized when a company is purchased at a price higher than the cumulative fair value of its recognizable net assets.
- Comprehend the methods used for goodwill and impairment in consolidated financial documentation.
Verified Answer
FM
Florence muthoniJun 23, 2024
Final Answer :
Goodwill:
- Goodwill represents future economic benefits arising from unidentified assets acquired in a business combination.
- The future economic benefits include such things as customer base,employees and superior manufacturing processes that make the parent willing to pay more than the value of the identified assets and liabilities.
- Goodwill represents future economic benefits arising from unidentified assets acquired in a business combination.
- The future economic benefits include such things as customer base,employees and superior manufacturing processes that make the parent willing to pay more than the value of the identified assets and liabilities.
Learning Objectives
- Comprehend the methods used for goodwill and impairment in consolidated financial documentation.