Kallus Corp. is an industry leader in the manufacture of toys. Each year, its design staff comes up with new ideas that are a great success. As a result, Kallus’s sales and profits consistently exceed those of other toy manufacturers. Over the past 10 years, Kallus has earned average net profits of $ 189 million, compared to $ 122 million for the typical company in the toy industry.

Answer the following questions:
a. Does Kallus have goodwill? Explain.
b. Is goodwill an asset? Explain. (Does it meet the definition of an asset found in SFAS No. 6 ?) c. If you believe Kallus has goodwill, how would you go about measuring it? Explain.
d. Should Kallus Corp. report goodwill in the balance sheet? Why, or why not?

  • CreatedDecember 17, 2014
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