Dear Friend,Hello and welcome. Thank you for providing an opportunity to assist you.As you know, Goodwill is any amount paid over and above in excess of the book value while acquiring a stake in a company or asset.
Your accountant is perfectly correct to say that the same should be amortized over period of time, say five years. There is no need to justify for this. You can straight away do this and it is perfectly within the ambit of GAAP. Section 197 defines intangible assets and Goodwill is one of them.
So, you should not have any problem going around with this.
I am sure this would help.
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Hello again.No, I am not saying that. Section 197 does not deal with the period. It just "Defines" goodwill as an intangible asset that can be amortized.
Having said this, Private companies in the United States, however, may elect to amortize goodwill over a period of ten years or less under an accounting alternative from the Private Company Council of the FASB.
FASB - Financial Accounting Standard Board Statement 142 deals with this. You need not justify 5 years. You can choose anything between more than 1 to less than 10 years. FASB Accounting Standards Update No. 2014-02, Intangibles—Goodwill and Other (Topic 350) deals with this. It allows private companies to
use straight-line amortization of goodwill for up to ten years, or less if the company is able to demonstrate an alternative useful lifespan.
Dear Friend,Yes.. Certainly.
All of the standards are aligned with one another to be globally accepted.