Will goodwill be valued and included in a merger for (1)merging company.(2)for the new entity formed,after merger?

Standard practice is to revalue the subsidiary assets in the subsidiary books to market value at the date of acquisition (particulalrly important if the there are substantial fixed assets valued at historical cost). The resulting asset revaluation reserve is eliminated with the subsidairy equity on consolidation. Any remaining extra value over the revlaued acquired net assets is recognised as Goodwill on Consolidation.

When a company takes over another company it also takes over the goodwill of that company. The buying company has to pay for the goodwill hence also takes over the goodwill of the company.

• Some times an Asian co takes over an European or American firm solely to take benifit of the firms goodwill.
• Sometimes the value of goodwill is more important than other assets when an outside firm is trying to enter a new market in a new sector or a new country.