As the Group Accountant of L Ltd, discuss the factors that influence the valuation of goodwill on acquisition date.

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L Ltd is in the manufacturing industry and is looking to diversify and expand its business. L Ltd has acquired 100% interest in S Pte Ltd for a cash consideration of $650,000 on 31 July 2020. S Pte Ltd has 2 business segments - hotel management and jewellery retail business. In evaluating the potential acquisition, L Ltd engaged valuation experts (2 external valuation specialists and 1 internal valuation team) in evaluating S Pte Ltd's assets and liabilities, including those which are not previously recognized on S Pte Ltd's financial records. Findings from L Ltd's due diligence exercise revealed the following information for S Pte Ltd: Carrying amount Fair value as Fair value as per pro-forma per internal as Asset / Liability Buildings Machinery Net current assets Unrecognised patent Unrecognised contingent liability lawsuit for statement of financial position $'000 200 100 50 valuation team $'000 410 (1) 100 50 Not identified External Valuer J $'000 350 (2) 150 50 per 120 Not identified (40) Fair value as per External Valuer K $'000 250 (3) 120 50 120 (40) L Ltd is in the manufacturing industry and is looking to diversify and expand its business. L Ltd has acquired 100% interest in S Pte Ltd for a cash consideration of $650,000 on 31 July 2020. S Pte Ltd has 2 business segments - hotel management and jewellery retail business. In evaluating the potential acquisition, L Ltd engaged valuation experts (2 external valuation specialists and 1 internal valuation team) in evaluating S Pte Ltd's assets and liabilities, including those which are not previously recognized on S Pte Ltd's financial records. Findings from L Ltd's due diligence exercise revealed the following information for S Pte Ltd: Carrying amount Fair value as Fair value as per pro-forma per internal as Asset / Liability Buildings Machinery Net current assets Unrecognised patent Unrecognised contingent liability lawsuit for statement of financial position $'000 200 100 50 valuation team $'000 410 (1) 100 50 Not identified External Valuer J $'000 350 (2) 150 50 per 120 Not identified (40) Fair value as per External Valuer K $'000 250 (3) 120 50 120 (40)

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Goodwill Meaning Factors and Need for Valuation Goodwill is an intangible asset that represents the market value of a business firm In simple words Goodwill is a monetary value of a reputation of a bu... View the full answer