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CS Professional · Corporate Restructuring, Valuation and Insolvency · Valuation of Business and Assets for Corporate Restructuring

In a share swap merger, the valuer for Anand Biotech Ltd finds that its goodwill is not separately identifiable and arises from the business as a whole, while its registered trademark can be sold or licensed independently. How should the valuer treat these two assets?

Goodwill is treated as a residual, being the excess of the business value over the fair value of identifiable net assets, while the saleable trademark is valued separately as an identifiable intangible. This avoids double counting and reflects that goodwill cannot be separated from the business.

  1. AValue both as identifiable intangible assets separately
  2. BTreat goodwill as the residual excess of business value over identifiable net assets, and value the trademark separatelyCorrect
  3. CIgnore the trademark because it is included in goodwill
  4. DValue goodwill by relief-from-royalty and ignore the trademark

Explanation

Goodwill is a residual: value of the business less the fair value of identifiable net assets, including separately valued intangibles such as the trademark. The trademark can be separated and licensed so it is valued on its own. Merging it into goodwill would double count or misclassify it.

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