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Goodwill amortisation

387 views 2 replies

Disha Bhawnani

CA CS

350 Points Joined June 2014

I was solving the chapter of valuation of goodwill. In a question goodwill has been amortised but the effect of the same has not been taken by the author in the calculation of future maintainable profit. Please guide as to what should be the correct treatment?

Replies (2)

CA Piyush Jhawar

Chartered Accountant

545 Points Joined March 2011

Add back amortisation of goodwill to the profit of that year...while calc FMP.Logic being you are finding out the goodwill so you need to eliminate that effect.