a) Goodwill could be described as the value of all favourable attributes that relate to a business

Question:

a) could be described as the value of all favourable attributes that relate to a business as a whole that are not separately identifiable. Give three examples of attributes that could result in goodwill.
b) The draft income statement for Thomson Pty ltd for the year ended 31 December 2013 showed service revenue of $120 000, wages expense of $35 000 and insurance expense of $2400.
Before the report is finalised you discover the following additional information that has not been taken into account in calculating the above draft figures.
• Wages of $900 owing for work done on the last day of December 2013.
• Services for clients totalling $1700 were performed but have not been invoiced.
• The insurance premium of $2400 above is for a 12 month policy that expires on 31 March 2014.
Required:
Show the three items as they would appear in the income statement for David Co after taking into account the additional information.
Goodwill
Goodwill is an important concept and terminology in accounting which means good reputation. The word goodwill is used at various places in accounting but it is recognized only at the time of a business combination. There are generally two types of...