A member of the board of Shoprite Enterprises plc has suggested two accounting policies for consideration by
Question:
1. The incorporation of goodwill in the financial statements as a permanent non-current asset in recognition of the favourable trading situations of several of the business's outlets and also to reflect the quality of management experience in the business.
2. No depreciation to be provided in future on the buildings owned by the company, because their market value is constantly appreciating and, in addition, this will result in an increase in the profit of the company.
Required
a. Briefly explain your understanding of each of the following:
i. Goodwill;
ii. Depreciation.
b. Discuss the acceptability of each of the above suggested accounting policies, highlighting any conflict with accounting concepts and standards.
Goodwill
Goodwill is an important concept and terminology in accounting which means good reputation. The word goodwill is used at various places in accounting but it is recognized only at the time of a business combination. There are generally two types of... Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
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a i Goodwill The precise nature of goodwill is difficult to define in a theoretically sound manner However it is generally recognized that goodwill ex...View the full answer
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Related Book For 
Introduction To Financial Accounting
ISBN: 978-0077138448
7th edition
Authors: Anne Marie Ward, Andrew Thomas
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