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Introduction AMP has today flagged a possible 12 billion write down of its troubled offshore assets The Chief Executive Andrew Mohl says AMP believes the carrying value of these assets is unlikely to recover for some time and it will therefore be prudent to reflect a more realistic view in the balance sheet Therefore he says the write- downs will largely be goodwill and not impact on the net assets of AMPs UK businesses As the issue above we make some definitions analysis and comments 1 Give a brief summary of the circumstances which give rise to goodwill a Goodwill can only be recognized when an acquisition results in gaining control of an operation or entity This term is defined and discussed in AASB 1013 As the AASB 1016 s 51 described any difference between the cost of the investment in the associate and the investors share of the net adjusted fair values is regarded as goodwill b According to the AASB 1013 Section 41 Goodwill is internally generated by the entity must not be recognized by that entity Goodwill which is internally generated by an entity is not permitted by this Standard to be recognized as an asset by that entity This is principally because of the difficulty or impossibility of identifying the events or transactions which contribute to the overall goodwill of the entity15481548 Internally generated goodwill which is not recognized as an asset will either go completely unrecognized or will be recognized as an expensec When an operation or an entity is acquired we can recognize goodwill which suggests that the particular assets and liabilities acquired must be capable of to be used together in meeting the objectives of the acquiring entity This suggests that the operation or entity must be able to survive independently of both the acquiring entity and the selling entity Such an entity is capable of producing goods or services that it can provide
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