Explain the accounting treatment of goodwill

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Question - Assume that you are working part-time as an accountant for a small proprietary company, and the shareholders are all members of the board of directors (BOD). The BOD wants to invest excess company cash in shares, and you have been asked to select 15 listed companies that you think suitable for investment of these funds. Your selected companies have high goodwill balances, and the BOD is not convinced that the goodwill value is useful information in making the investment decision since this asset has no physical existence, its value is not readily verifiable, and its value depends on management estimates and judgments. The task is to write the report for the BOD that includes the following aspects to explain the usefulness or not of goodwill in making investment decisions. Explain the accounting treatment of goodwill.

Reference no: EM132954796

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