The amount paid over and above the value of Net Identifiable Assets – i.e., the value of total assets less total liabilities, is the amount of Goodwill. The assets that are posted on the acquired company are all identifiable assets. Let us see the concept of Net Identifiable Assets and Goodwill through an example:Īn acquirer has paid $20,000 to purchase another company. Example – Calculation of Net Identifiable Assets and Goodwill This is the reason that Goodwill is not considered a part of Net Identifiable Assets. The asset amount that is not on the balance sheet is to be put under “Goodwill.” The amount of the goodwill is relative to the amount that an acquiring company paid and is essentially based on the perception and assumptions of the acquiring company. Identifiable assets are assets that the acquired company includes in the list of balance sheet items. The prefix “Net” here means after deducting the liabilities that also come along with the acquisition. NIA is used for Purchase Price Allocation (PPA) and the calculation of Goodwill in Mergers and Acquisitions (M&A). Net Identifiable Assets (NIA) consists of the assets acquired from a company whose value can be measured at a given point of time and its future benefit to the company is recognizable. Updated JanuWhat is Net Identifiable Assets?
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