Goodwill - limited to 10% of the acquiring company's surplus
"Only the purchasing company recognizes goodwill, and is limited to 10% of the acquiring company's surplus. "
Does this hold for SAP or GAAP accounting or both? I was confused when looking at the wiki vs. the battle cards
Comments
It holds for Purchasing GAAP only. The difference of Goodwill under SAP versus GAAP is explained on p331 of Odomirok (Cpt 22).
thanks!
Sure, good luck.
I'm a bit confused on this too. The battle card's formula for SAP goodwill is min(P-S2,10%*S1). Wouldn't that imply SAP goodwill is also limited to 10% of the purchasing company's surplus?
That was my understanding too, with my confusion coming from the quoted sentence above which is found in the Purchasing GAAP section, which makes it sound like the 10% limit also applies to GAAP.
I re-read that citing, and it looks like 10% of acquiring's surplus cap is only applied to SAP, not Purchasing GAAP. Sorry about the confusion.
Thanks for the update! Should the purchasing GAAP section be amended?
I have edited the purchase GAAP section to state that the 10% limit applies only to SAP.