DEpreciation on purchased good will

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V BSR (Querist)
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16 June 2010 Good afternoon my dear friends,

MY question is :company purchased a good will from the society .Company take over the business of the society .

now company can calculate the depreciation under companies act? if yes then what is the percentage? or other wise company can ammortise the good will amount upto 5 years? what is the right treatment for the purchased good will and how to present in the financial statements?
thanks

Abhishek Mohta

Abhishek Mohta (Expert)
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17 June 2010 Purchased Goodwill shall be capitalized in the books and shown in the Balance Sheet above Fixed Assets. There is no specific depreciation rate for Goodwill. The company can amortise the Goodwill over a period of 5 years or it can extend the same to 10 years (max. allowed under AS 26).