Research On Purchased Goodwill Measurement Based On Fair Value

With the increasing of M & A transactions between enterprises, how to measure the goodwill reflected during the acquisition has become the hot spots of accounting theory and practice. In general, the difference between the cost of acquisition and fair value of net assets of business share is confirmed as purchased goodwill. For the capital market imperfections and other factors, the current measurement mode can not accurately measure the purchased goodwill. It also affects the accuracy of accounting information and reduces the quality of accounting information .when the cost of acquisition is less than the fair value of net assets of business share, the merger will be the case of negative goodwill. The negative goodwill is not confirmed in the practice. But this approach makes the measurement of the purchased goodwill is inconsistent and also mislead the people's understanding of the nature of the purchased goodwill.Goodwill is over-earning power of the combined business. M & A process is not the real source of purchased goodwill. The current method of measuring the purchased goodwill has been introduced the fair value measurement, but the real sense of fair value is not achieved. So this article is focused on how to introduce the fair value measurement, achieve an accurate measurement of the purchased goodwill and enhance the quality of accounting information.This thesis firstly analysis attributes of the fair value measurement and gives the reasons why the introduction of fair value measurement of the purchased goodwill is necessity and feasibility. Then it is pointed out that the new method of measurement for the purchased goodwill should be introduced. With the new method given in the article, the specifications for measurement of the purchased goodwill on different form of payment can be used to guide practice on the M & A transactions. Finally, the equity evaluation model is used to analyze cases. Through empirical analysis, on the one hand, it is identified the importance of introduction of new method for the measurement of the purchase goodwill. On the other hand, the method given in this paper provides a measurement model for the practical examples.