Is internally generated goodwill included in the calculation of the amount of a private company’s distributable surplus?
When calculating the distributable surplus at the end of the income year, the value of internally generated goodwill would not normally be included as it should not be recognised in the company’s accounting records under approved accounting standards. However, where the private company includes the internally generated goodwill in its accounting records, the amount will be taken into account in calculating the distributable surplus amount on the basis that the company is presenting a true and fair view of its financial position in the accounts. Where the private company does not include the internally generated goodwill in its accounting records, such goodwill will be taken into account only if the Commissioner considers that the accounting records significantly undervalue the company’s assets or overvalue its provisions. It is important to separate the value of internal goodwill from the things that are a source of goodwill, such as identifiable intangible assets. These assets may hav
Related Questions
- When calculating a private companys distributable surplus, can the Commissioner change amounts shown in the company’s accounting records?
- Is internally generated goodwill included in the calculation of the amount of a private company’s distributable surplus?
- How is a private company’s distributable surplus calculated?
