What is goodwill in SAP EC-CS - Consolidation?

SAP Term: goodwill

• Component: EC-CS

• Component Name: Consolidation

• Description: Goodwill is a differential that arises during the consolidation of investments. Goodwill is capitalized as an intangible asset and, when applicable, is either eliminated or is amortized over its remaining life, the length of which is determined either by legal statutes or internally. Possible reasons why goodwill is incurred by an upper unit are: A difference between the consideration given for the ownership of the investee unit and the fair value of the investment's net assets. Additional benefits such as the acquisition of know-how, customer contacts, elimination of competitors, and so forth During first consolidation, goodwill is calculated as the difference between the investment book values of the upper units and the stockholders' equity of the investee units being consolidated, taking hidden reserves fair value adjustments into account. In the consolidation of investments method you can determine whether goodwill is calculated using the direct share or the group share.

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• Key Concepts: 
  Goodwill is an intangible asset that is created when one company acquires another for a price higher than the fair market value of its assets. In SAP EC-CS Consolidation, goodwill is used to represent the difference between the purchase price of an acquired company and the fair market value of its assets. 
  
  How to use it: 
  Goodwill is used in SAP EC-CS Consolidation to adjust the purchase price of an acquired company. The goodwill amount is added to the purchase price of the acquired company and then allocated to the individual assets of the company. This allows for a more accurate representation of the purchase price in the consolidation process. 
  
  Tips & Tricks: 
  When entering goodwill into SAP EC-CS Consolidation, it is important to ensure that the amount entered is accurate and reflects the actual purchase price of the acquired company. Additionally, it is important to ensure that any adjustments made to the purchase price are also reflected in the goodwill amount. 
  
  Related Information: 
  Goodwill can also be used in other areas of SAP such as Financial Accounting and Controlling. Additionally, it is important to note that goodwill can be subject to impairment if certain conditions are met.