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updating financial statement

Discussion in 'Business Operations' started by grassmasterswilson, Apr 10, 2011.

  1. grassmasterswilson

    grassmasterswilson LawnSite Platinum Member
    from nc
    Messages: 4,923

    I'm updating my financial statement. How do you guys figure out goodwill or what your business name is worth? A percentage of your gross income?
  2. Fvstringpicker

    Fvstringpicker LawnSite Fanatic
    Messages: 7,648

    Unless you purchased a business for more than the asset value, you're not going to have goodwill.
  3. WheatBookkeeping

    WheatBookkeeping LawnSite Member
    Messages: 108

    Goodwill that you put on your good reputation and excellence exhibited by your company is not carried on your Balance Sheet. If that is your meaning, sorry.

    But you can carry, for instance, the amount a new partner pays for an equity share that is over the actual equity value you have accumulated on the books. For instance, If you have $20,000 equity and you are willing to sell a half interest in the company for $12,000, then the Balance Sheet will reflect that both you and the partner will have a $10,000 equity position. The $2000 extra that the new partner paid will be a $2000 Goodwill entry (that you alone own) on the opening Balance Sheet for the next accounting period.

    Sale of assets for an amount greater than fair market value is also a form of “Goodwill” and is carried on the books of the purchaser and must be amortized over 180 months.

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