Explore BrainMass

Explore BrainMass

    What is goodwill and when is it on the balance sheet?

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Kallus Corp is an industry leader in the manufacture of toys. Each year, its design staff comes up with new ideas that are a great success. As a result, Kallus sales and profits consistently exceed those of other toy manufacturers. Over the past ten years, Kallus has earned average net profits of $189 million compared to the $122 million for the typical company in the toy industry.

    Does Kallus have goodwill? Explain?

    © BrainMass Inc. brainmass.com June 4, 2020, 12:49 am ad1c9bdddf

    Solution Preview

    If you want an ACCOUNTING answer.....

    Goodwill as defined by generally accepted accounting principles (GAAP) arises when you purchase a business for more than the fair market value of assets identified. Now, lets parse the techno-babble. What they mean is that they record this strange asset called goodwill when a firm buys ...

    Solution Summary

    Ah yes, the mystery of "goodwill." Seems this is a sticking point for most students. Finally, an explanation in plain everyday language and an example to show you.