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Strategies & Market Trends : Value Investing
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To: Jurgis Bekepuris who wrote (45504)11/16/2011 2:40:57 PM
From: J Mako  Read Replies (1) of 78667
 
I will treat Goodwill differently.

Unlike tangible assets (e.g. a machinery) and intangibles (e.g. a broadcast license), goodwill is not some capital locked inside the business in order to generate the profit.

What if I were to rewrite GAAP and say: instead of creating a goodwill entry in the book, you need to treat that portion of the acquisition cost as an expense paid to the business seller when you acquire a buisness? If you look at it that way, goodwill should be subtracted when calculating ROE.
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