Silver Ltd has acquired a major manufacturing division from Fern Ltd. The accountant,

Ms Ball, has shown the board of directors of Silver Ltd the financial information

regarding the acquisition. Ms Ball calculated a residual amount of Tk. 45,00000 to be

reported as goodwill in the accounts. The directors are not sure whether they want to

record goodwill on Silver Ltd's statement of financial position. Some directors are not

sure what goodwill is or why the company has bought it. Other directors even query

whether goodwill is an asset, with some being concerned with future effects on the

statement of profit or loss and other comprehensive income.

We have to make a report for Ms Ball to present to the directors to help them

understand the nature of goodwill and how to account for it.