Prepare a report for mr wilson to present to the directors

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Silver Ltd has acquired a Blink manufacturing division from Lining Ltd. The accountant, Mr Wilson, has shown the board of directors of Silver Ltd the financial information regarding the acquisition. Mr Wilson calculated a residual amount of $45 000 to be reported as goodwill in the accounts. The directors are not sure whether they want to record goodwill on Silver Ltd's statement of financial position. Some directors are not sure what goodwill is or why the company has bought it. Other directors even query whether goodwill is an asset, with some being concerned with future effects on the statement of profit or loss and other comprehensive income.

Required

Problem 1: Prepare a report for Mr Wilson to present to the directors to help them understand the nature of goodwill and how to account for it.

Reference no: EM132921273

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