Question

Goodwill arising on amalgamation in the nature of purchase is to be amortised

Answer 1

Answer:

Goodwill arising on amalgamation represents a payment made in anticipation of future income and it is appropriate to treat it as an asset to be amortised to income on a systematic basis over its useful life. Due to the nature of goodwill, it is frequently difficult to estimate its useful life with reasonable certainty.Since the Goodwill arising on amalgamation represents a payment made in anticipation of future income it should be amortized to income on a systematic basis over its useful life. However, the amortization period should not exceed five years unless a somewhat longer period can be justified.

It is a made by which one company acquires another company and equity shareholders of the combining entities do not continue to value proportionate share in the combining entity. The business of the acquired company may not intended to be continued.

Answer 2

Answer:

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Explanation:

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