Evaluation method

At present, there are two main methods for evaluating goodwill:

1. Cutting difference method.

the cut-off method is an evaluation method to determine the goodwill value of an enterprise by deducting the difference between tangible assets and identifiable intangible assets from the total value of the enterprise.

only when the total value of an enterprise has a surplus after deducting all tangible assets and tangible intangible assets, does the goodwill value of an enterprise exist. There are two preconditions here:

① You must first know how to determine the total value of an enterprise.

② The quantity of tangible assets and tangible intangible assets of the enterprise and the current estimation are accurate. In this case, the tangent method can be used to calculate the value of the goodwill. The main steps are as follows:

(1) Evaluate the value of the enterprise's overall assets through the method of overall evaluation;

(2) The value of various tangible assets and the value of various identifiable intangible assets are respectively evaluated by the method of individual evaluation;

(3) The sum of the values of individual tangible assets and individual identifiable intangible assets is deducted from the overall asset evaluation value of the enterprise, and the rest is the evaluation value of the enterprise's goodwill.

second, the excess return method.

the excess return method is a method to evaluate the goodwill of enterprises based on the excess return of reorganized enterprises.

the basic idea of this method is to estimate the goodwill directly by the enterprise's income exceeding the industry average, and the theoretical basis is the definition of goodwill. According to the different years in which an enterprise has obtained excess returns, this method can generally be further divided into two methods:

1. Capitalization of excess returns. This method can be used to evaluate the goodwill of sustainable enterprises with good operating conditions and stable income. The steps are as follows:

① Evaluate the values of individual tangible assets and individual intangible assets of the enterprise respectively, and work out their total added value;

② reasonably determine the industry average rate of return ih;

where: Br is the sum of net income after income tax of each enterprise, and Cr is the sum of total assets of each enterprise

③ Multiply the total value of individual assets of the enterprise with the industry average rate of return, and find out the income that can be obtained from the sum of individual assets of the enterprise calculated according to the industry average income level;

④ forecast the future average annual income of the enterprise in detail;

⑤ deduct the income value of each single asset according to the industry average level from the future income value of the enterprise, so as to get the annual excess income value of the enterprise;

⑥ choose an appropriate capitalization rate to capitalization the annual excess income value of the enterprise, and get the goodwill evaluation value. The specific formula is as follows:

G: evaluation value of corporate goodwill

Bo: expected annual income of the enterprise

ih: industry average rate of return

Cs: sum of evaluation values of individual assets

i: capitalization rate

2. Excess income discount method. When the excess income of an enterprise can only last for a limited year, this method should be used to evaluate the value of goodwill. The main steps are as follows:

① Determine the remaining economic life of goodwill reasonably;

② forecast in detail the annual income of the enterprise in the remaining period and the amount of income obtained by multiplying the industry average rate of return and the total value of assets evaluation of the enterprise, and the difference is the expected annual excess income of the enterprise;

③ determine the reasonable discount rate, and the sum of the discounted amount of the expected excess income during the remaining economic life of the enterprise is the evaluation value of the goodwill of the enterprise. The formula is:

G: evaluation value of enterprise goodwill

i: discount rate

Bt: expected excess return of the enterprise in the t year

n: expected years of excess return of the enterprise

expanded data

accounting treatment of initial recognition of goodwill

1. Under the new standard system, accounting treatment of business combination under different control involves goodwill.

China's new standard No.2 "Business Combination" stipulates: "The buyer shall recognize the difference between the merger cost and the fair value share of the identifiable net assets of the acquiree in the merger as goodwill." It can be seen that China's initial recognition and measurement of goodwill are completely consistent with the provisions of international accounting standards, that is, they are all indirect measurement of difference.

according to the newly issued accounting standards for business enterprises in China, the accounting treatment involving business combination should first distinguish between business combination under the same control and business combination under different control. For business combination under the same control, the new standard stipulates that the related assets and liabilities are measured at book value, and the merger premium can only adjust the capital reserve and retained earnings, but not confirm the goodwill.

2. Contents of consolidated costs not under the same control.

according to the new standard No.2, in the case of business combination not under the same control, the purchaser should determine the merger cost and the share of the fair value of the acquiree's identifiable net assets obtained in the merger respectively according to the standard, and compare the size of the two. The merger cost should include the following three items:

(1) the assets paid by the buyer to gain the control of the purchased party on the purchase date, the liabilities incurred or assumed, and the fair value of the equity securities issued;

(2) various direct related expenses incurred for business combination;

(3) The possible impact amount of future events agreed in the merger contract or agreement on the merger cost, but the premise that this amount is included in the merger cost is that it can be reasonably estimated that the future events are likely to occur on the purchase date and the impact amount on the merger cost can be reliably measured.

if the merger cost is greater than the acquired share of the fair value of the identifiable net assets of the acquiree, the difference shall be recognized as goodwill; If the former is less than the latter, the measurement of the two should be reviewed first. If the former is still less than the latter after review, the difference should be included in the current profit and loss.

that is to say, the new standards adopt different ways to deal with positive goodwill and negative goodwill. For positive goodwill, the new standard stipulates that it should be recognized as an asset separately. Combined with the requirements of No.2 Standard, the initial investment cost of long-term equity investment determined according to the merger cost should be adjusted accordingly while confirming the goodwill. Negative goodwill is not included in profit and loss by stages in the way of deferred revenue, but is included in profit and loss at one time in the current consolidation period.

For enterprise merger transactions that do not form parent-subsidiary relationship, that is, absorption merger and new merger, the goodwill of the buyer can be confirmed separately in the accounting treatment on the purchase day, thus being listed separately in the separate balance sheet of the merged surviving enterprise, thus forming a holding merger transaction with parent-subsidiary relationship.

because the value of goodwill is included in the consolidation cost recorded as the cost of long-term equity investment in the accounts on the consolidation date, the goodwill is not presented separately in the separate balance sheet of the buyer on the consolidation date, but is included in the "long-term equity investment" item, and it is only necessary to present the consolidated goodwill separately in the consolidated balance sheet on the consolidation date.

Baidu Encyclopedia-Goodwill Evaluation

Baidu Encyclopedia-Goodwill