Research On Purchased Goodwill Measurement Based On Enterprise Market Value

At present, the goodwill measurement methods of the international and domestic accounting standards on consolidated goodwill are under common control in business combination, the goodwill is recognized as the difference between merger costs and the fair value of identifiable net assets. However, due to many factors of merger costs such as the merging parties bargaining, right premium holding right for the merger of the companies issuing shares. Also, the merger costs will be the impact of the stock market, easily lead to much greater than the actual value of the Goodwill. Therefore, the merger method of measuring goodwill will largely overestimate its actual value. A few scholars have questioned the measurement of goodwill, but few scholars have proposed a new method for measurement of combined goodwill.According to the theory of surplus value of goodwill, goodwill should be the difference between the value of enterprise and net tangible assets of enterprises. Currently, the theoretical research for the enterprise value has matured, but few literature has link the business value with goodwill.Based on the theory of surplus value of goodwill and enterprise value, the value of goodwill of companies and enterprises should be identifiable as the difference between the value of enterprises and net assets of the enterprise. However, as the evaluation is complex and exist many subjective factors to influence the enterprise value, the paper propose to use enterprise market value to asses the enterprise value. In the merger, the corporate value can be determined through the stock market, which is the enterprise market value. As a result, the value of combined goodwill should be the difference between market value of enterprise and the identifiable net assets of enterprise. In addition, the paper has included an empirical research for relationship of value of the stock market and enterprise's internal value. On the one hand that there is a close linear relationship existed between the intrinsic value of stock prices and enterprise's internal value; on the other hand, proved long-term stock prices reflect the enterprise value more than short-term stock prices. Finally, the paper verified the method of combined goodwill measurement based on enterprise market value through a typical case in order to prove the method is feasible and more reasonable.