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How is goodwill calculated?

April 26, 2017Australia businesses calculated for sale goodwill mergers and acquisitions selling a business valuations

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How is goodwill calculated?

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In modern valuation methods, goodwill is not directly calculated. It is derived by subtracting the value of the tangible assets, such as plant & equipment and stock from the valuation figure. Assume in the example in the above panel that stock is worth $600,000 and plant & equipment $275,000.