Accounting for Goodwill

Kallus Corp. is an industry leader in the manufacture of toys. Each year, its design staff comes up with new ideas that are a great success. As a result, Kalluss sales and profits consistently exceed those of other toy manufacturers. Ove the past 10 years, Kallus has earned average net profits of $189 million, compared to $122 million for the typical company in the toy industry.

Required: Answer the following questions. Cite your sources for each.

a. Does Kallus have goodwill as defined by GAAP? Explain. Include a definition of goodwill.

b. Is goodwill an asset? Explain (Does it meet the definition of an asset found in SFAS No. 6?) Yes or no is not sufficient.

c. If you believe Kallus has good will, how would you measure it? Explain

d. Should Kallus Corp. report goodwill in the balance sheet? Why or why not?

e. How do International Accounting Standards differ from U.S. GAAP concerning the measurement and presentation of goodwill? Cite the IFRS.

Your responses should be concise but sufficient to address the issues. At least two but not more than three total pages not including reference page. No title page is necessary.