Business Valuation

Bells

Hello,

I was hoping someone will be able to help.

I have come across the situation where a Ltd company has had a professional business valuation carried out and the company has entered this valuation onto their balance sheet. The entry they have done is to DR Business Valuation under assets, CR Fixed assets to nil and to have posted the balancing CR figure to 'revaluation reserve'.

My feeling is this is internally generated goodwill and should not be on the balance sheet:

https://www.aatcomment.org.uk/accountancy-resources/financial-accounting-and-reporting/frs-102-long-read-intangible-assets-and-goodwill-emerging-issues/

Would anyone be in agreement?

Many Thanks

davealucas

I believe you are correct. From an accounting principle, goodwill can only be generated when a business is sold or if there are changes in a partnership.