Publications \ 28.08.2013

The value of a company is significantly influenced by its "business reputation" (a term adopted in the Russian Federation) or goodwill (a term adopted in international practice). Goodwill is the difference between the price of a firm and the fair value of all of its assets. The task of accounting is to explain the occurrence of this difference, to decompose it into its constituent components. To do this, first, the net assets are revalued at fair value. It is a violation of comparability principles to compare amounts that represent market valuation and book value of net assets. Secondly, from the resulting difference, intangible assets (for example, private brands, Internet domains, customer lists, etc.) are identified that were not recorded on the balance sheet of the acquired company, but at the date of purchase have fair value. Third, if there is a business combination, the requirements of IFRS 3 Business Combinations recognize contingent liabilities that also refine the measurement of goodwill.

After the identification of the components, the indecomposable amount remains, which is goodwill.

Goodwill is the future economic benefits arising from assets that cannot be individually identified and separately recognized. (IFRS 3)

Under IFRS 3, at the acquisition date, the acquirer must:

Recognize the goodwill resulting from the business combination as an asset;

Measure goodwill at cost.

The resulting difference can be either positive or negative. Positive goodwill is viewed as a premium to the price paid by the buyer in anticipation of future economic benefits, while negative (badwill) is seen as a discount on the price when the company sells for a price below market value. Negative goodwill should be recognized immediately in the income statement.

Consider methods for calculating the difference between the price of a firm and the fair value of all its assets, as well as the subsequent measurement of goodwill and the procedure for disclosing information about it in accounting.

Goodwill calculation methods

There are several methods for determining the value of goodwill when buying a company. "Proportional "method. Traditionally goodwill arising at the time of acquisition subsidiary is treated (and calculated) as the excess of the fair value of the consideration given to the controlling shareholder over its share of the fair value of the subsidiary's net assets.

The value of goodwill is defined as the difference between the fair value of the investment (SS inv.) and the investor's share of the fair value of the identified net assets acquired at the date of the transaction (date of purchase) (DSSCH on d.p.):

Goodwill = SS inv. - DSSCHA on the village of p.

Share of fair value of net assets at the date of purchase (DSSCH on d.p.) is defined as the difference between the value of acquired identifiable assets (SS act.) and the amount of liabilities and contingent liabilities of the controlled company (SS oblig.) (see examples below):

DSSCH on d.p. = SS act. - SS oblig.

Example

The parent company OOO Aktiv acquires 60% of its subsidiary OOO Passiv for 252,000 USD. The fair value of the subsidiary's identifiable net assets at the acquisition date is CU280,000. 40% of the subsidiary's shares are publicly traded and their fair value is CU 160,000.

To calculate goodwill, let us determine the investor's share of the fair value of the acquired identifiable net assets at the date of purchase:

DSSCH on d.p. = 280,000 USD x 60% = 168,000 USD

Based on this, the goodwill value at the date of purchase will be: (252,000 - 168,000) c.u. = 84,000 USD

In the case of acquiring control over LLC Passiv at a bargain price, when the fair value of the acquisition of net assets exceeds the cost of the business combination, the organization, the investor should recognize in the income statement a profit from a successful purchase (badwill) at a time.

Example

The parent company OOO Aktiv acquires 60% of its subsidiary OOO Passiv for 152,000 USD. The parent's share of the fair value of the subsidiary's identifiable net assets at the acquisition date is CU 180,000.

In this case, the investor company has drawn up a profitable transaction - a business combination, as a result of which, at the date of acquisition, it received an income from a successful purchase (badwill) in the amount of: (180,000 - 152,000) c.u. = 28,000 USD

This method of calculating goodwill is usually called proportional.

As the example shows, the “proportional” method only accounts for goodwill attributable to the controlling shareholder.

Full goodwill method. IFRS 3 implements the concept of “full goodwill”. Its essence boils down to the fact that in business combination transactions it is necessary to calculate the amount of goodwill in the same way as it would be calculated if the acquiring company had bought out the entire voting rights of the acquired company. This approach is based on the fact that in a business combination transaction, the acquirer acquires control over all the assets of the acquired company, including goodwill (and not over part of the assets corresponding to the share of acquired voting rights) and, accordingly, must fully reflect them in consolidated financial statements. The “total goodwill” method of calculation means that goodwill on a business combination is recognized for both the parent's equity interest and the non-controlling interest.

In accordance with IFRS 3, goodwill is calculated as the difference between the fair value of the acquired business as a whole (SS business) and the fair value of all of its net assets (SSCHA on d.p.) on the date of purchase:

Goodwill = SS of business - SSVA for d.p.

The fair value of the acquired business is determined as the sum of the investment's fair value (SS inv.) and the fair value of the non-controlling interests in the acquired business (SS NKD):

SS business = SS inv. + SS NKD

The amount of “total goodwill” under IFRS 3 should be allocated to the goodwill attributable to the investor's equity (Goodwill inv.), and goodwill attributable to the uncontrolled share (Goodwill NKD). The first is defined as the difference between the fair value of the investment (SS inv.) and the investor's share of the fair value of net assets at the date of purchase (DSSCH on d.p.), which corresponds to the “proportional” method of calculating goodwill. The second is the difference between “full goodwill” and the goodwill attributable to the investor.

Goodwill inv. = SS inv. - DSSCHA on d.p.

Goodwill NKD = Goodwill - Goodwill inv.

Example

Let us use the conditions of the first example (see p. XX) and define “total goodwill” in accordance with IFRS 3. Calculate the fair value of the business as a whole: CQ of the business = 252,000 USD. + 160,000 USD = 412,000 USD

Based on this, the amount of "full goodwill" will be: Goodwill = 412,000 USD. - 280,000 USD = 132,000 USD

The “full” goodwill must be allocated to the goodwill attributable to the investor's share: CU252,000. - 280,000 USD x 60% = 84,000 USD,

and goodwill related to the uncontrolled interest: CU 132,000. - 84,000 USD = 48,000 USD

Note that the change in the way goodwill is measured affects the way in which the uncontrolled interest is calculated. According to the “proportional” calculation method, its value is determined as the product of the fair value of the net assets of the controlled company at the reporting date (SSCHA on d.o.) and the share of shares not controlled by the investor organization (parent company) (Yes):

NKD = SSCH on d.o. x Yes

When using the “full goodwill” method of calculating the non-controlling interest must be increased by the amount of goodwill attributable to the non-controlling interest:

NKD = SSCH on d.o. x Yes + Goodwill NKD

Example

The parent company OOO Aktiv owns 65% of the shares of OOO Passiv. The fair value of the net assets of LLC Passiv as of the reporting date (FVVA per CU) is CU 160,000. “Full” goodwill is CU 45,000, including:

Goodwill attributable to the investor (Goodwill inv.) - 30,000 USD,

Goodwill attributable to non-controlling interest (Goodwill NCC) - CU 15,000

Determine the uncontrolled interest (NPV) in accordance with the method of proportional calculation of goodwill. Share of shares not controlled by the investing entity (parent company) (Yes) in this example equals: (100 - 65)% = 35%. Consequently, the value of the NKD is: 160,000 USD. x 35% = 56,000 USD ...

When calculating full goodwill, the ACI value will increase by the amount of goodwill attributable to the non-controlling interest:

NKD = 160,000 USD x 35% + 15,000 USD = 71,000 USD

We also note that in calculating “full goodwill” there is a problem of measuring the uncontrolled interest at fair value. Typically, the fair value of a business (SS business) can be determined by the fair value of the company's shares traded on the free market. To calculate the fair value of shares outstanding, find the product of the number of shares outstanding (Number of shares) for the fair value of one share (SS promotions):

Business CC = Number of Shares x CC Shares

Thus, in calculating “full goodwill”, there is an increase in the amount of net assets recorded in the consolidated financial statements of the parent company.

Subsequent measurement of goodwill

Difficulties in determining the amortization period arise primarily due to the fact that goodwill represents future economic benefits from synergies, that is, from assets that can only be considered in synergy. Only if goodwill is associated with an identifiable asset can it be reasonably expected to generate a profit for the customer over a period equal to the useful life of the asset. However, as a rule, goodwill is associated not with one specific asset, but with a whole group of closely related assets.

Recoverable amountUse value

Step 1. Allocation of goodwill to cash generating units;

Step 2. Comparison of the unit's recoverable amount (BCe) with the carrying amount (BCe).

Example

	At the beginning of the month, thousand rubles	Impairment, thousand rubles	At the end of the month, thousand rubles

(BSe + goodwill) and BCe:

1,200,000 rubles;

RUB 160,000 - ((400,000 / 10,000,000) x 4,000,000) rubles;

Example

	At the beginning of the month, thousand rubles		At the end of the month, thousand rubles

Allocation of the amount of loss reversal among the assets of the unit:

RUB 160,000 - ((400,000 / 10,000,000) rubles x 4,000,000 rubles);

Subsequent measurement of goodwill

In accordance with IFRS 3, after initial recognition, goodwill is measured at cost less accumulated impairment losses. Goodwill is not amortized but is tested for impairment in accordance with IAS 36 Impairment of Assets annually (regardless of whether there is any indication of impairment) or more often (if there is evidence of impairment).

Earlier, for many years, the most common option in the world for the subsequent measurement of goodwill was its amortization. However, this method was the subject of constant criticism, which was based mainly on two significant arguments - complexity and subjectivity in determining the amortization period and the choice of the amortization method. The amortization period for goodwill varies from 5 to 40 years or more (for example, in Russia the amortization period for goodwill can take 20 or more years, in the United States for a long time, up to 2001, this period was 40 years).

Difficulties in determining the amortization period arise primarily due to the fact that goodwill represents future economic benefits from synergies, that is, from assets that can only be considered in synergy. Only if goodwill is associated with an identifiable asset can it be reasonably expected to be profitable for the customer over a period equal to the useful life of the asset. However, as a rule, goodwill is associated not with one specific asset, but with a whole group of closely related assets.

Difficulties in choosing the depreciation method are due to the fact that the value of goodwill is subject to significant and uneven fluctuations, and therefore the proportional decrease in its value by calculating linear depreciation (as is done in most cases) does not reflect the economic essence of the processes taking place.

The only way out of this situation can be a periodic revaluation, the methodology of which is proposed by IFRS.

Goodwill Impairment Testing

Goodwill impairment testing involves comparing the recoverable amount of acquired goodwill with its carrying amount.Recoverable amountis the higher of the asset's fair value less costs to sell or value in use. Fair value, or net selling price, is the amount that could be obtained from the sale of an asset in a transaction between informed, interested parties and independent parties.Use valueis the present present value of the estimated future flows Money that are expected to arise from the use and disposal of the asset at the end of its useful life.

It is clear that testing for impairment of goodwill at on an individual basis(ie, determining the recoverable amount of goodwill) is not possible. To address this issue, IAS 36 introduces the concept of a cash-generating unit (CGU), and goodwill is tested on the basis of such units.

Cash generating unit (CGU)is the smallest group of assets that, through its use, generates cash inflows that are independent of cash inflows from other assets or groups of assets. For example, a single plane at an airport cannot generate cash without a runway, and a single machine in a shop without an entire production line.

For impairment testing purposes, goodwill acquired in a business combination must be allocated to the CGUs that benefit from the purchase. Acquired goodwill represents a payment to an entity in anticipation of future economic benefits from assets that cannot be identified and recognized separately. In other words, goodwill does not generate cash flows independently of other assets and often has a positive effect on cash flows from multiple units. This is why the recoverable amount of goodwill as a stand-alone asset cannot be determined. If there is any indication that goodwill is impaired, it will not be determined its recoverable amount, but the recoverable amount of the cash-generating unit to which the goodwill relates.

In accordance with IAS 36, the CGU to which goodwill is allocated must be tested for impairment annually, regardless of whether there are indicators of impairment. Testing assumes the following algorithm of actions:

Step 1. Allocation of goodwill to cash generating units;

Step 2. Comparison of the unit's recoverable amount (BCe) with the carrying amount (BCe).

If ВСе exceeds БСе, then no further action is required, since the fact of impairment of goodwill for the period under review was not detected. If the BCe is greater than the estimated BCe, the company must recognize an impairment loss. It reduces the profit of the reporting period.

An impairment loss must reduce the carrying amount of the firm's assets in the following order:

The carrying amount of the goodwill allocated to the unit is reduced;

The carrying amount of the assets included in the unit is reduced proportionally.

In allocating an impairment loss, the carrying amount of the asset must not be less than the greatest value of three indicators:

Its net selling price, if it can be determined;

The values ​​of its use, if it can be determined;

Companies should not have “freedom of choice” in the allocation of goodwill to units of account. According to IFRS, such an allocation should be “reasonable and acceptable”. If goodwill is classified as a weak unit, then it may have to be written off immediately or fairly soon. Goodwill, on the other hand, assigned to a highly profitable unit, has every chance of never being written off. When choosing a unit of account, management must assess whether the company will grow, make a profit, develop cyclically, whether sharp changes are possible in the near future, and so on.

Example

LLC "Aktiv" is the buyer of LLC "Passive". The acquired goodwill amounted to RR 2,800,000. and was divided into two generating units - transport and marketing segments at a ratio of 1200: 1600.

A year later, Aktiv LLC tested a cash-generating unit dealing with transport business, for impairment and obtained the following results: the recoverable amount (ВСе) of the unit amounted to 9,600,000 rubles, and the book value (BCe) - 10,000,000 rubles. (including the book value of assets: fixed assets - 4,000,000 rubles, intangible assets - 4,000,000 rubles and accounts receivable - 2,000,000 rubles). Determine the impairment loss (calculated data are presented in table 1).

Table 1. Calculation of impairment loss

	At the beginning of the month, thousand rubles	Impairment, thousand rubles	At the end of the month, thousand rubles

The calculation of the amount of impairment loss is performed in several stages:

1. Determination of the carrying amount of a cash-generating unit as the sum of the carrying amount of all assets and goodwill (BCe + goodwill):

(4,000,000 + 4,000,000 + 2,000,000 + 1,200,000) rubles. = 11,200,000 rubles;

2. Comparison of the carrying and recoverable amounts of a cash-generating unit

(BSe + goodwill) and BCe:

(9,600,000 - 11,200,000) rubles. = - 1,600,000 rubles. (impairment loss);

3. Allocation of impairment loss:

a) a decrease in the amount of goodwill to zero:

DEBIT "Profit and loss" CREDIT "Goodwill"

1,200,000 rubles;

b) distribution of the remaining amount 4,000,000 rubles. (1,600,000 - 1,200,000) rubles. between other assets of the unit:

DEBIT "Profit and loss" CREDIT "Fixed assets"

RUB 160,000 - ((400,000 / 10,000,000) x 4,000,000) rubles;

DEBIT "Profit and loss" CREDIT "Intangible assets"

RUB 160,000 - ((400,000 / 10,000,000) x 4,000,000) rubles;

DEBIT "Profit and loss" CREDIT "Provision for impairment of receivables"

RUB 80,000 - ((400,000 / 10,000,000) x 2,000,000) rubles.

Reversal of an impairment loss

If in subsequent years after the impairment loss was recognized, there has been a significant increase in goodwill (associated with an increase in the value of the name of the firm, the development of a customer base and other factors that can generate profit), then this fact indicates that the impairment loss recognized in previous years has decreased. or no longer exists. However, IFRS does not allow for a reversal of an impairment loss for goodwill, as any subsequent increase in the recoverable amount of goodwill would be an increase in internally generated goodwill. And internally generated goodwill does not meet the criteria for recognition in the financial statements.

Example

Let's use the data from the previous example (see p. XX). It is assumed that at the next reporting date, LLC “Aktiv” has every reason to believe that the impairment loss of the cash-generating unit can be reversed. The unit's recoverable amount is determined at that date in the amount of RR 10,200,000. The corresponding calculated data are shown in Table 2.

Table 2. Loss reversal

	At the beginning of the month, thousand rubles	Reversal of impairment loss, RUB thous.	At the end of the month, thousand rubles

Allocation of the amount of loss reversal among the assets of the unit:

DEBIT "Fixed assets" CREDIT "Profit and loss"

RUB 160,000 - ((400,000 / 10,000,000) rubles x 4,000,000 rubles);

DEBIT "Intangible assets" CREDIT "Profit and loss"

RUB 160,000 - ((400,000 / 10,000,000) rubles x 4,000,000 rubles);

DEBIT "Provision for impairment of receivables" CREDIT "Profit and loss"

RUB 80,000 - ((400,000 / 10,000,000) rubles x 2,000,000 rubles).

The balance is 200,000 rubles. ((10,200,000 - 10,000,000) rubles) will not be reflected in the accounting, as it is accounted for internally generated goodwill.

Disclosures in Financial Statements

The financial statements must necessarily disclose information that will enable users to assess the dynamics of the carrying amount of goodwill during the reporting period. This information:

The factors that influenced the increase in the value of goodwill when it was accepted for accounting, that is, a description of each intangible asset that was not recognized separately from goodwill, and an explanation of why the fair value of this asset cannot be measured reliably;

The gross value of goodwill and accumulated impairment losses;

Goodwill included in a group of assets held for disposal;

Impairment losses recognized during the reporting period;

The amounts recognized in the income statement as negative goodwill.

Thus, for a potential investor, the valuation of goodwill is a powerful tool that gives an idea of ​​what part of the market value of an enterprise is expressed in its real assets and what is in goodwill, which contributes to a more accurate representation of the degree of risk of investing in companies.

For many companies, goodwill is the most essential asset that lacks identifiability and isolation. This is what helps a company to generate more profit per unit of assets than its kind. medium company... In fact, it is something intangible that may be inseparable from the firm, but can significantly change the value of the business.

A good business reputation is possible when a company produces goods (performs work, renders services) of high quality, has a strong management team, and a developed marketing strategy. Of no small importance is the presence of a permanent customer base, well-established relationships with suppliers, high credit scores, a favorable location and an established corporate culture.

Assessment methods business reputation(goodwill)

In assessing the business reputation of an enterprise, this is the amount by which the value of the business exceeds the market value of the financial, material and part of the intangible assets of the enterprise reflected in the financial statements.

In other words, the goodwill of an enterprise represents a portion of the enterprise's value that exists only with that enterprise and cannot be attributed to any particular asset.

An enterprise's value for goodwill arises when the enterprise makes a return on assets or equity, typically above the industry average.

There are methods for assessing the business reputation of an enterprise (goodwill):

• o accounting method;
• o excess profits;
• o formulaic.

Accounting method. The goodwill of an enterprise, calculated using the accounting method, is the difference between the purchase price (acquisition costs) of the company (enterprise) and the aggregate value of all identifiable assets and liabilities (in liabilities).

The sequence of determining the value of the company's business reputation (goodwill) by the accounting method:

• o the price (costs) of the acquisition of the enterprise (Zp) is determined;
• o the book value of tangible assets is determined as of the date of sale (acquisition) of the enterprise (BSTMA);
• o the book value of assets is adjusted so as to determine their market value (РСтма);
• o the value of separately identifiable intangible assets (separated from the enterprise) is determined according to the balance sheet as of the date of sale (acquisition) of the enterprise (Stna);
• o determine all liabilities, all accounts payable of the enterprise (About);
• o the value of the company's business reputation (goodwill) is determined as the difference between the purchase price and the market value of all tangible assets and separately identifiable intangible assets, minus accounts payable(liabilities) of the enterprise:

St 6m = Зп - (РСтма + Сна) - About. (9.16)

Example. Company "A" paid company "B" 1,090,000 thousand rubles. for 6,000,000 ordinary shares. A total of 10,000,000 ordinary shares of Company B are in circulation. Therefore, the investor's share is 60% (6000: 10,000 x 100%).

Direct costs of company "A" for the acquisition of company "B" amounted to 2,000 thousand rubles. Consolidated balance sheet of company "B" at the time of purchase is presented in table. 9.7. Determine the value of the goodwill of Company B, which was acquired by Company A.

Table 9.7

Balance sheet (consolidated) of company "B" (at the time of purchase)

Negotiable		Authorized capital
Cash funds		Additional
The main		Total own funds
including:		Short term commitments
		Bond
buildings (stop st.)
equipment (rest. st.)
Other assets
Total assets		Total liabilities

• 1. The market value of assets and bonded loan is determined.
• 1.1. Calculation of the market value of a bonded loan with a coupon yield of 6% at a discount rate of 8% and maturity in 4 years.

Calculation procedure.

Coupon interest (payments) on bonds: 200,000 x 0.06 = 12,000 thousand rubles.

The total amount of payments on bonds:

Sob = 200,000 x (1 + 4 x 0.06) = 200,000 + 48,000 = 248,000 thousand rubles.

Present value of total bond payments:

A coupon pr = 12,000 x = 39,745.52 thousand rubles.

And the basic amount = 200,000 x (1 + 0.08) -4 = 147,006 thousand rubles.

The present value of the entire bonded loan is 39,745.52 + 147,006 = 186,751.5 thousand rubles.

The market value of the bonded loan as of the valuation date: 186,751.5 thousand rubles.

• 1.2. The market value of the assets and liabilities of company "B" revealed as a result of the revaluation at the measurement date was:
  • - reserves: 95,000 thousand rubles;
  • - land: 420,000 thousand rubles;
  • - buildings: 550,000 thousand rubles;
  • - equipment: 80,000 thousand rubles;
  • - bond loan: 186,751.5 thousand rubles.

Discount rate 8% (market interest rate at time of purchase), maturity: 4 years.

• 2. The procedure for calculating business reputation (goodwill).
• 2.1. Investment costs: 1,090,000 + 2,000 = 1,092,000 thousand rubles.
• 2.2. A normalized balance sheet (not accounting) is compiled for the purpose of evaluating company "B", taking into account the market value of assets and liabilities identified as a result of revaluation (Table 9.8).

Table 9.8

Negotiable		Authorized capital
Cash		Additional
		Retained net income
Fixed assets		Total equity
including:		Short-term commitments
buildings (stop st.)		Bond
equipment (rest. st.)
Other assets
Total assets		Total liabilities

2.3. The value of net assets is calculated (equivalent equity capital companies):

Net assets = Equity = Assets - (Short-term liabilities + Bond loan) = 1,590,000 - (155,000 + 186,751.5) = 1,248,248.5 thousand rubles.

2.4. The investor's share in the net assets of company B at book value:

Investor's share = Net assets x Investor's share = 1,248,248.5 x 0.60 = 748,949.1 thousand rubles.

2.5. The difference between investment (purchase) costs and the value of net assets 1,092,000 - 748,949.1 = 343,050.9 thousand rubles.

Thus, the value of the business reputation of company "B" acquired by company "A" is 343,050.9 thousand rubles.

Excessive profits method proceeds from the fact that all intellectual property objects, including unidentified (unallocated) NML enterprises, participate in the formation of the total profit of the enterprise. The cost of business reputation of an enterprise (goodwill) using the surplus profit method is considered as the value of a part of intangible assets that create profits in excess of the market average.

The sequence of determining the value of the company's business reputation (goodwill) using the excess profits method:

The average industry profitability (Ro) is calculated as the ratio of the annual net profit (NPr) to the average annual cost of the industry's own funds (Сco):

Ro = Chpr / Sko;

The profitability (Pp) is determined operating enterprise as the ratio of the annual net profit (NPr) to the average annual cost of the enterprise's own funds (SCP):

Pp = CPr / Ckp;

The surplus profit (AP) is determined, for which the difference between the average industry profitability and the profitability of the enterprise is multiplied by the value of the average annual cost of own funds (RV) of the enterprise:

DP for = (Pp - Ro) x CKp;

• - the capitalization ratio (Кк) is calculated;
• - the cost of intangible assets is calculated as a quotient from dividing the amount of excess profit by the capitalization ratio:

Sleep = DP / Kk;

The portion of the value of intangible assets attributable to the goodwill assessed is determined.

This method is used when the difference between the industry average profitability and the profitability of the enterprise is positive. This difference determines the degree of excess profits in a given business.

Example. Based on the analysis results financial condition the enterprise compiled a normalized balance (Table 9.9).

Table 9.9

Normalized balance sheet of company "B"

Negotiable		Authorized capital
Cash funds		Additional
		Retained net income
The main		Total equity	1 248 248,5
including:		Short term commitments
buildings (stop st.)		Bond
equipment (rest. st.)
Other assets
Total assets		Total liabilities

Normalized (average annual) net profit 240,000 thousand rubles. Average return on equity by industry (return on equity) 15%. Capitalization ratio 20%.

We calculate the amount of equity capital (IC):

SK = Assets - Liabilities = 1,590,000 - (155,000 + 186,751.5) = 1,248,248.5 thousand rubles.

The average return on equity by industry (return on equity) is 15%, so the return (average return) on equity is:

NPro (sk) = 1,248,248.5 x 0.15 = 187,237.28 thousand rubles.

Then the excess profit:

240,000 - 187,237.28 = 52,762.725 thousand rubles.

The value of goodwill is determined as the quotient of the excess profit divided by the capitalization ratio:

St gud = 52,762.725: 0.2 = 263,813.63 thousand rubles.

If data on the average industry profitability are insufficient or absent, and the excess profit has to be determined based only on the data of the enterprise, then use formula method. Its essence lies in the fact that, instead of the average industry profitability, retrospective data on the company's profit are used.

Calculation sequence:

• 1) the average income (net profit) for the retrospective period is determined;
• 2) the average annual market (not book) value of tangible assets for the same retrospective period (RStma) is determined;
• 3) deducted from the average annual market value of tangible assets average annual costs separately identified intangible assets, but not included in the balance sheet, and all liabilities.

The result obtained is the value of assets for the formula (РСтма - intangible assets - About);

• 4) the profit of tangible assets is determined according to industry indicators of the rate of return ( i pr.otr 1tp): RStmasr - intangible assets - Rev) x i np. from p;
• 5) the profit from tangible assets is deducted from the amount of the received net profit: NPav - (RStmasr - NML - About) x i etc .retr ;
• 6) if there is excess income, then this income is capitalized:

Sfm = [CPav - (Stmasr - IA - Ob) x i pr.otr] / i To

Example. Determine the value of goodwill, if the analysis of the balance sheet and financial results reveals the following:

• - industry indicator of the rate of return: i pr. ex = 15%:
• - the profitability of the company i k = 20%;
• - financial indicators are presented in table. 9.10.

Based on retrospective data on the profit of the enterprise, a table is drawn up. 9.10:

Table 9.10

Determination of net profit on average tangible assets, thousand rubles

Surplus profit: 240,000 - 128,486 = 111,514 thousand rubles. The cost of business reputation (inseparable intangible assets) at i k - = 20%:

St gud - 111 514: 0.2 - 557 570 thousand rubles.

Liquidation value when determining the value of an enterprise (business) by the cost approach, it is the value that the owner of the enterprise can receive upon liquidation of the enterprise and the separate sale of its assets.

Assessment work includes several stages.

• 1. The last balance sheet is taken.
• 2. A calendar schedule for the liquidation of assets is being developed, since the sale of various types of assets of an enterprise requires different time periods.
• 3. Determined the gross proceeds from the liquidation of assets.
• 4. The appraised value of assets is reduced by the amount of direct costs. The direct costs associated with the liquidation of an enterprise include commissions, appraisal and law firms taxes and fees payable on the sale, taking into account the liquidation calendar at the valuation date at a discount rate that takes into account the risk associated with the sale.
• 5. The residual value of assets is reduced by the costs associated with the ownership of assets prior to their sale, including the costs of maintaining stocks of finished goods and work in progress, maintaining equipment, machinery, mechanisms, real estate, as well as administrative expenses for maintaining the operation of the enterprise until its liquidation ...
• 6. The operating profit (loss) of the liquidation period is added (or subtracted).
• 7. Subtracted preemptive rights for severance pay and payments to employees of an enterprise, claims of creditors for obligations secured by a pledge of the property of a liquidated enterprise, arrears in obligatory payments to the budget and off-budget funds, settlements with other creditors.

Thus, the residual value of the enterprise is calculated by subtracting from the adjusted value of all assets of the balance sheet the amount of current costs associated with the liquidation of the enterprise, as well as the amount of all liabilities.

Determination of the final value of the assessment of the value of the business

After reading this chapter, you will be able to determine the final value of the enterprise valuation.

International standards business appraisals recommend, and Russian standards fix as mandatory three assessment approaches - cost, comparative and profitable, which makes it necessary to reconcile the results obtained, since these approaches are applied to the same object within the same appraisal procedure.

To derive the total value of the value calculated by the three approaches and valuation methods, various methods are used to determine the weights necessary to derive the value of the business based on the weighted average formula. In addition to the methods of mathematical and subjective weighting described in the monographs of S. Pratt, the method of expert qualimetry, the probabilistic approach and the method of analysis of hierarchies (MAI) are also used. The method uses a criteria tree, in which general criteria are divided into private ones. For each group of criteria, importance coefficients are determined. Pairwise comparison is a means of determining the coefficients of the importance of criteria or the criterion value of alternatives. The comparison result is evaluated on a point scale. On the basis of such comparisons, the coefficients of the importance of the criteria are determined, the assessment of alternatives, and the overall assessment is found as a weighted sum of the assessments of the criteria.

The proposed methods for reconciling the assessment results are heuristic in nature, i.e. do not have strong scientific evidence. However, these methods have found wide practical application in valuation activities due to their simplicity and clarity.

Rice. 10.1.

The weighted average was empirically determined to determine the final value of the cost:

o when using two methods, the following formula is applied:

where C min - min the estimated value of the cost, determined by any method; C max - max is the estimated value of the cost, determined by any method.

o when using three methods, the following formula is applied:

(10.3)

where C min - min the estimated value of the cost, determined by any method; C max - ptah the estimated value of the cost, determined by any method; C cf - the average estimated value of the cost, determined by any method.

The final value of the cost, calculated by three approaches and valuation methods, and the justification for this value is entered into the report.

Cost estimation acts as an efficiency criterion management decisions that can lead to a decrease or increase in the value of the enterprise.

The value of the enterprise (business) is reflected in the value of securities.

Federal Agency for Education

Department of Banking

Discipline: Assessment of Financial Institutions

COURSE WORK

on the topic: Assessment of the value of GOODWILL (based on the materials of OJSC "URSA Bank")

Completed: Popova Irina

Alexandrovna

group ME-73

Checked by: Melnikov

Vladimir Sergeevich

Novosibirsk 2009

INTRODUCTION

1.1. Different approaches to the interpretation of the concept of "goodwill"

1.2. Classification of goodwill as an economic category

1.3. Methodological framework for assessing the company's goodwill

2.1. Organizational and economic characteristics OJSC "URSA Bank"

2.1.1. General economic characteristics of the bank

2.1.2. History and structure of the share capital of OJSC "URSA Bank"

2.1.3. Development strategy of JSC "URSA Bank"

2.2. Financial analysis economic activity jar

2.2.2. Analysis of liquidity of JSC "URSA Bank"

2.2.3. Analysis of financial results

3.1. Goodwill valuation as an estimate of the difference between the market value of a company and the value of all its assets

3.2. Economic feasibility of evaluating the goodwill of OJSC "URSA Bank"

CONCLUSION

BIBLIOGRAPHIC LIST

APPENDIX

INTRODUCTION

Amid increased competition associated with liberalization domestic markets, the processes of globalization of the world economy, against the background of constant growth in stock markets, the deviation of the market capitalization of enterprises from the value of their real assets: buildings, structures, equipment, inventories - enterprises need an effective financial management system that takes into account the role of intangible assets and goodwill in the formation of their value.

Any company has not only material assets, such as buildings, equipment, stocks of raw materials and materials, cash, etc., but also a business reputation, established, a circle of customers and trusted suppliers, trademarks and brands, popularity in the market and other factors that, at first glance, , it is very difficult to evaluate.

Despite the complexity of valuing goodwill, there are a number of cases where valuation is essential:

· Purchase (sale) of a business;

· Mergers and acquisitions;

· Making management decisions (when managing the value of the company).

In general, goodwill can be anything that helps a company to generate more profit per unit of assets than an average similar company. For example, it can be a competent leader, well-trained friendly staff, proven business technologies, or a favorable territorial position.

The purpose of the assessment is to determine the market value of goodwill for the purpose of reflecting it in IFRS, which will make it possible to assess the effectiveness of the merger of banks, as well as to assess the impact of goodwill on the formation of equity capital through the additional issue of shares.

The implementation of this goal required the following main tasks:

To reveal the content of goodwill as an economic category based on an analysis of the nature of its occurrence and forms of manifestation in the reproduction process;

Draw up a multidimensional classification of goodwill as theoretical basis improvement of the enterprise value management system;

Specify methods for assessing the value of goodwill in order to reflect the specifics of the formation of the value of intangible resources;

Determine the impact of goodwill on changes in equity capital during the period of additional share issues;

The object of the study is the process of forming the value of the company's goodwill.

Objects of supervision - OJSC "URSA Bank".

The subject of assessment is the goodwill of OJSC URSA Bank.

The subject of the research is the process of substantiating the market value of goodwill of OJSC URSA Bank.

General economic research methods include analytical and computational-constructive.

The degree of study of the topic - for the theoretical and methodological development of issues of valuation of goodwill, the works of N. Abdulaev, I. Averchev, I. Blank, E. Grishina, V. Eliseev, S. Kuznetsov, Yu. Leontiev, A. Orlov, M Pyatov, L. Revutskiy, Y. Sokolov, V. Shakin, I. Shera, E. Schmalenbach and others.

The first chapter discusses different approaches to the interpretation of the concept of "goodwill", the classification of goodwill as an economic category, as well as the methodological basis for assessing the company's goodwill. The second chapter contains the organizational and economic characteristics of OJSC “URSA Bank”, an analysis of its financial and economic activities and conclusions regarding the assessment of the value of goodwill. In the third section, the cost of goodwill of OJSC URSA Bank is calculated, and the economic feasibility of the assessment is substantiated.

CHAPTER 1. THEORETICAL AND METHODOLOGICAL BASIS OF THE COMPANY'S GOODWILL ASSESSMENT

1.1 Different approaches to the interpretation of the concept of "goodwill"

In Russian financial science and theory accounting the category "goodwill" is recognized as synonymous with the category "goodwill". ON THE. Abdulaeva and N.A. Kolayko, Ya. V. Sokolov and M.L. Pyatov, S.V. Valdaitsev, I.A. The form is considered incorrect Russian translation of the English term "goodwill" and suggest that the business reputation of the organization be recognized as a separate element of the goodwill of the enterprise (company). Thus, it is necessary to clearly distinguish between the business reputation of an organization, which is taken as an element of the value of an operating company for the purposes of business valuation, financial management and accounting, from the term "business reputation", which is a category of psychology and reflects the image of a subject that is formed by its counterparties, which there is a psychological act that has no value expression.

The capital market recognizes the real existence of goodwill for companies. So, S. Polozkov, T. Semenov indicate that “... in the early 1980s. various criteria began to show the growing gap between the market capitalization of some firms and the value of real assets - buildings, structures, equipment, stocks ... ”, while this growth, for objective reasons, cannot be associated only with speculative warming up of the securities market. Among largest companies in the world in terms of market capitalization are Microsoft Corp., Intel Corp., Vodafone Group Plc, Johnson & Johnson Inc., CiANCo Systems Inc., Procter & Gamble Co., Coca-Cola Co., GlaxoSmithKline Plc - companies that are characterized by significant the excess of market capitalization over the value of their net assets and the high value of identifiable intangible assets used by them. For this reason, the value of the business, which reflects the market conditions, the legal form of the business and the expectations of investors about the functioning of the business in the future, should be increased by the value of the goodwill created.

English-Russian economic vocabulary gives the following definitions of the term "goodwill":

1. The notional value of business ties (firms), "price" of the accumulated intangible assets of the firm, monetary value of intangible capital (prestige of trade marks, experience of business ties, stable clientele);

2. Monetary estimate of the expected future excess of profitability (of a given firm in comparison with the average profitability of similar firms);

3. Intangible fixed capital (the difference between the price of the enterprise as a whole and the price of its real fixed capital);

4. Benevolence, benevolence (clientele).

As noted by Ya.V. Sokolov, M.L. Pyatov, the category "goodwill" was first used in English commercial practice in the first half of the fifteenth century. In its literal interpretation, it meant the "goodwill" of the participants in commercial transactions in providing a number of concessions to their counterparties in exchange for concessions on their part.

In accordance with the BSV-I1 standard adopted in 1988 and amended in 1991 by the American Society of Appraisers (ASA), goodwill is defined as the "good name" of the company and includes the intangible assets of the company, which consist of the prestige of the enterprise, its business reputation , customer relationship, location, product range, etc. These factors are not separately identified and not taken into account in the reporting of the enterprise, but serve as a real source of profit.

The category "goodwill" became widespread in the Anglo-American financial and accounting literature at the end of the nineteenth century. Particular attention began to be paid to goodwill, when in practice it was noted that the increased demand for the company's products is created by a group of factors, the value of which is not subject to reflection in the accounting and which are not directly controlled by it, for example, reputation and professional quality leading managers, business connections, which leads to the emergence of additional profits. Since the asset of the company was traditionally understood as the funds that bring it profit, it could be assumed that if the company receives a profit based on the results of the reporting period, the rate of which on its invested capital is higher than that of enterprises of a similar industry, that is, potential competitors, then the company uses its own an asset, the cost of which at a given moment in time is not estimated and is not reflected in financial accounting.

Taking into account the increased by the present stage tendencies in the consideration of an asset as a resource used in the financial and economic activities of a company and necessarily controlled by it, the traditional definition of goodwill as an asset seems unreasonable, since the company's control over its advantages resulting from the individual nature of management's specific labor is conditional character and cannot be fully realized at this stage of the development of human civilization. Thus, goodwill is not an asset of the company, and, therefore, from a legal point of view, the company's ownership of the created goodwill does not exist, and the company cannot exercise ownership through the attributes inherent in this institution, including disposing and disposing of goodwill in the benefit of third parties at their own discretion, which emphasizes the economic essence of the goodwill category.

F. Pickley noted the presence of goodwill at each enterprise capable of generating excess profits. By excess profit, he understood the amount exceeding the indicator of normal profit, calculated according to the average rate of return on invested capital within a particular industry, taking into account the risks inherent in the business. It should be noted that F. Pickley considered goodwill not only in the context of the additional advantages of the firm and extraordinary profits, but also as an asset arising from a merger and acquisition transaction. Thus, the goodwill created by the enterprise characterizes its potential for obtaining excess profits, however, for “... purely technical reasons, only acquired goodwill can be reflected in accounting, that is, goodwill arising from the sale and purchase of the enterprise itself or its shares, goodwill, for which money has been paid or must be paid ... ".

In domestic financial management, the dual nature of goodwill is indicated, but is not considered as one of the main characteristics of this phenomenon, as a result of which ideas about the impact of goodwill on the financial system of an enterprise and changes in its value are distorted.

So, V.V. Kovalev defines goodwill as “… a conditional valuation of the“ value ”of an enterprise, which is the difference between the value of an enterprise as a whole and the total market value of all its assets, considered in isolation; goodwill depends on time and market parameters, it is revealed only in the course of the transaction for the purchase and sale of an enterprise ... ”.

As goodwill of the organization N.A. Abdulaev, N.A. Kolayko propose to accept "... part of the intangible assets of the enterprise, determined by business ties, the prominence of the company name, trade mark and other elements ...". A.G. Gryaznova, M.A. Fedotova, S.A. Lenskaya, according to which, “… goodwill is a part of the intangible assets of an enterprise, determined by good reputation, business relations, the well-known brand name, brand name. Goodwill occurs when an enterprise makes consistently high profits that are above the industry average ... ”.

In practice, the implementation of a transaction for the sale and acquisition of a target company is preceded by an assessment of the company in order to determine the most probable price of the transaction, since each of the parties has its own ideas about the possible future profits of the target company in the conditions of the holding's functioning or as an independent subject of economic relations, as well as about the costs incurred during the formation of the company, organizational and transaction costs. Thus, the relevance of studies of the effect of goodwill on the value of an operating enterprise is determined by the degree of intensity of the occurrence of situations in which it is necessary to assess the total manifestation of the firm's individual and intangible benefits. In some cases, business valuation is carried out for reasons other than the practical implementation of a business combination, for example, for the purpose of obtaining a loan. Taking into account the increasing tendencies of company mergers, characteristic of the global and Russian economies, as well as restrictions on the use of the merger of interests method for business mergers, business valuation studies, as well as the study of goodwill as a relatively new financial category, are relevant and necessary.

Thus, considering the category "goodwill", on the one hand, we come across acquired (accounting) goodwill, which is essentially an asset and arises only during the purchase and sale of enterprises, and, on the other hand, with the created (accumulated) goodwill, which characterizes the opportunities the development of a functioning enterprise and its future extraordinary income. Despite significant differences between them, they act as components of the same phenomenon - the presence of individual intangible advantages for a certain company, while accounting goodwill is a consequence of the created goodwill and reflects the expectations of the participants in the acquisition of this company about the value of its created goodwill, taking into account changes in external and internal factors over time. Proceeding from this, the goodwill of an enterprise should be defined as a set of inseparable intangible advantages of a given enterprise, capable of bringing it extraordinary profits and acting as resources used in financial and economic activities, but control over the use of which is conditional. In an acquisition transaction, the deviation of the transaction price from the net asset value arising from the reimbursement of the goodwill generated by the previous owners is recognized as acquired goodwill and is reflected in the financial statements of the entity as an intangible asset.

Thus, the value of goodwill acts as a reasonable and significant element of the value of a business, which must be taken into account when determining the reasonable value of a business in the course of a sale and purchase transaction, calculating the fundamental value of securities (shares) of the target company and predicting the dynamics of changes in their market value. in the long run.

1.2 Classification of goodwill as an economic category

It is advisable to classify goodwill according to the following criteria:

By types of relationships, the object of which is goodwill:

· Legal goodwill is always an advantage that arises only as a result of doing business, which means that the acquisition of goodwill in the market is impossible, just as it is impossible to alienate it in favor of a third party, and this advantage in practice has a specific value expression, which is an extraordinary profit.

Economic goodwill acts as an object of economic relations. The set of those elements of business or personal qualities that encourage customers to continue to use the services of a given enterprise or a given person and that bring the company a profit in excess of what is required for a reasonable return on all other assets of the enterprise, including income for all other intangible assets that can be identified and separately measured

Where goodwill can be disposed of:

· Nonseparable goodwill is the company's goodwill that remains unchanged after the change of the previous administrative management team.

· Goodwill not separable from an individual is such goodwill that is acquired by a company only at the expense of individual professional and personal characteristics administrative management and is lost along with its change.

By the degree of impact on the financial result of the enterprise:

· Positive goodwill that generates extraordinary profits from its use.

· Negative goodwill (badwill), the impact of which on the financial result is negative, as a result of which the value of the enterprise as a single property complex is less than the corresponding value of the enterprise's property, reduced by the amount of its liabilities.

By the forms of manifestation in the reproductive process:

Generated goodwill is goodwill generated by the entity under valuation that is not reflected in the financial statements and results in extraordinary profits,

· Accounting goodwill acquired by the holding company at the time of the transaction to acquire the company together with its other assets.

By completeness of reflection in financial statements:

Market-based, when the acquisition cost of goodwill is determined as the difference between the transaction price of the target company and the market value of its adjusted net assets,

· Regulatory goodwill, where the acquisition cost of goodwill is to be determined as the difference between the transaction price of the target company and the carrying amount of its adjusted net assets or the starting value when the target company is sold at a specialized auction.

According to the degree of control over the acquired in the course of a business combination:

Partial goodwill - arises when, as a result of a business combination using the purchase method, the buyer acquires less than 100% of net adjusted assets, as a result of which the buyer (holding) does not reflect the full value of goodwill of the acquired company in the consolidated financial statements of the buyer. This situation is typical when a target company is acquired by a holding company through securities.

· Full goodwill arises when full control over all assets and liabilities of the target company is established.

By the level of manifestation in the economic system:

Goodwill of an enterprise is formed by intangibles created by the enterprise itself individual benefits and affects the receipt by the enterprise of extraordinary profits in the framework of the relevant branch of the national economy.

Regional goodwill is formed by external conditions that are intangible in nature, characteristic of a given region and affects the receipt of extraordinary profits by an enterprise within the framework of the national economy, due to the emergence of inalienable intangible advantages for enterprises in the region, in comparison with enterprises in other regions of similar industries.

· Goodwill national provides the formation of extraordinary profits for enterprises of the national economy, in comparison with enterprises of similar industries in foreign countries. Protection of the interests of national producers, regardless of their location, is the implementation of national goodwill
.

Summarizing the above classification, it can be represented in a visual diagram (Fig. 1):

Figure 1 Classification of goodwill as an economic category

1.3 Methodological framework for measuring a company's goodwill

There are several ways to assess the value of a company's goodwill, which are most widely used in Russian practice.

1. Valuation of goodwill as an estimate of the difference between the value of a company and the market value of all its assets. Assessment of goodwill as the difference between the market value of the finished business and the value of the company's assets can be conditionally divided into two large blocks. First, you need to calculate the value of all the assets of the company. Secondly, you need to determine the value of the entire business as a whole, using either a comparative or income valuation method. The choice of one or another approach depends on the availability and reliability of the information used in the assessment. Since a business is primarily perceived as a tool for generating income, it would be advisable to determine the value of a business using the income method. Income approach - a set of methods for assessing the value of the appraisal object, based on the determination of the expected income from the appraisal object.

The income approach involves the use of methods for calculating the value of the appraised object: capitalization at the rate of return and direct capitalization. This approach is based on the assumption that the value of an object is determined by the present value of future income at an appropriate capitalization rate that takes into account the rate of return on invested capital. To determine the desired value, it is necessary to determine the amount and structure of income, the timing and risk of its receipt. After the valuation of the total assets of the company has been carried out and the market value of the company has been determined, goodwill is determined as the difference between the two valuation results obtained.

2. Assessment of goodwill in terms of excess profit. The main provision of the excess profits method is to assume the possibility of goodwill to bring the company profit, the level of which is higher than the industry average value for invested capital. It is possible to talk about the emergence of goodwill only if the financial result of the enterprise exceeds the financial result that it should receive in normal economic conditions of functioning thanks to its tangible and intangible elements reflected in the financial statements and the actual value of which can be measured
.

The goodwill valuation technique, which assumes the calculation of excess profit, is based on the assumption that if one enterprise receives more profit per unit of assets than a similar enterprise in the same industry, this means that it is its goodwill or goodwill that brings the additional profit to the enterprise. The assets of all companies are assumed to generate the same return. Thus, having determined the standard profit per unit of assets, you need to compare it with real indicator profitability of assets and determine the volume of unrecorded assets, that is, goodwill. When selecting analogous enterprises with which a comparison of profitability can be carried out, one must be guided by the following criteria:

The enterprise produces similar products (works, services);

Located in the same locality (region, district);

Has similar production facilities.

In this work, it is advisable to abandon this method, since it is impossible to select on Russian market analog banks. This is due to the merger of the largest banks in Russia and the formation of a new unique legal entity.

3. Assessment of goodwill by volume of sales.

To use the method for assessing goodwill by sales volume, you need to know the industry average profitability ratios. The company's goodwill is calculated using the formula:

GW = (NOI - QfxRq) / Rg, (1)

where G W is goodwill;

NOI - net operating income from the company's activities;

Rq is the industry average profitability ratio;

Rg is the capitalization ratio of intangible assets;

Qf is the cost of products sold.

Traditionally, the surplus profit method has been applied over a long period of time to value small businesses. Today the method is widely used in appraisal practice.

Since this method requires the calculation of the cost of products sold, which cannot be done in relation to banks due to the wide diversification of activities, this necessitates the rejection of this method for assessing the goodwill of OJSC URSA Bank.

4. Goodwill valuation method based on cost indicator.

Taking into account the peculiarities of the group of methods of capitalized profit (method of excess profits, method based on product sales), the author proposes a method for assessing goodwill based on the cost indicator.

The economic content of this method consists in determining the net profit indicator in conjunction with the prime cost indicator based on the assumption of the manifestation of a set of individual intangible benefits at the stage of distribution of the produced product (goods, work, services), which corresponds to the essence of goodwill. The normal profit used for the purpose of calculating excess profit is defined as the product of the cost of goods produced (goods, works, services) and the profitability indicator of production activities, which is equal to the profit / cost multiplier. Taking into account all the variety of activities of the enterprise, in the implementation of which its assets and goodwill are used, in this case, the aggregate of all economically feasible expenses of the enterprise reflected in the financial statements is understood as an indicator of the cost of production.

To smooth out the influence of random dynamic factors on the valuation of goodwill, it is necessary to use the average values ​​of the indicators under consideration for at least three years preceding the moment of valuation.

Since the method is based on a prime cost indicator, and in banking, the services provided are widely diversified, which makes it impossible to determine the average annual prime cost for the bank as a whole. This justifies the refusal to use this method in term paper.

5. Qualimetric method for assessing goodwill.

The economic content of the qualimetric method for assessing goodwill is to draw an analogy between the utility of an enterprise and the value of its generated goodwill.

Whereas the utility (or quality) factor is calculated using the formula:

where Kf is the coefficient of utility (or quality) of the estimated
object;

qmax - the best indicator among the analogues of the evaluated object;

qmin - the worst indicator among the analogues of the evaluated object;

qf is the actual value of the utility (quality) indicator of the evaluated object.

According to V.M. Eliseev, the value of an enterprise is directly identified with the level of utility of its activities.

Due to the fact that in the general economic value, depreciation is interpreted as a loss of utility of an object, the value of the level of depreciation of all assets of the evaluated enterprise (W) in aggregate (total depreciation of the enterprise) will be equal to:

Goodwill value (GW), according to V.M. Eliseev, is defined as the difference between the obtained value and the physical depreciation of non-current assets (Wf) and the value of intangible assets reflected in the financial statements.

GW = W - Wf - IA (4)

The considered method seems to be insufficiently substantiated and cumbersome, while, in essence, this method must be attributed to the group of indirect methods, the relevance and necessity of application of which in practice is questioned.

Taking into account the above aspects, it is advisable to refuse to use this method in assessing the value of goodwill of OJSC URSA Bank.

Thus, to determine the value of goodwill of OJSC URSA Bank, it is reasonable and expedient to apply the method of assessing the difference between the value of the company and the market value of all its assets.

CHAPTER 2. ANALYSIS AND EVALUATION OF FINANCIAL AND ECONOMIC ACTIVITIES OF THE ENTERPRISE

2.1 Organizational and economic characteristics of OJSC "URSA Bank"

2.1.1 General economic characteristics of the bank

Novosibirsk URSA Bank appeared in December 2004 as a result of the merger of Sibacadembank and Uralvneshtorgbank. URSA Bank is one of the leading regional banks in the country, which occupies a leading position in its "home" markets (Siberian and Ural Federal Districts).

The bank is controlled by a group of Russian entrepreneurs led by
I. Kim, most of whom have been successfully working in the banking sector for a long time. Foreign shareholders (EBRD, DEG and Clariden Leu) own more than 28% of the bank's capital. The relationship between Russian and foreign shareholders and the bank is governed by the shareholders' agreement.

The bank is developing as a financial institution providing a full range of services. The main focus is on consumer lending and lending to small and medium-sized enterprises.

The bank's capitalization level can be called acceptable given that a significant part of the capital is represented by hybrid instruments (preferred shares), and a significant share of the share capital is goodwill.

While the quality of the corporate loan portfolio is good enough, the percentage of overdue loans in the retail portfolio is quite high, although not critical. However, portfolio risks are expected to decrease due to an increase in the share of less risky loans.

Diversification of the loan portfolio is above average. At the end of last year, the twenty largest borrowers accounted for 10.6% of the total loan portfolio. Such a low level of risk concentration (significantly below average) is ensured by the emphasis on lending to individuals, small and medium-sized enterprises.

URSA Bank shows fairly high profitability indicators due to wide margins and improved efficiency. In recent years, the expansion of the bank's activities was mainly due to the growth of assets. Customer deposits could not be the only source of funds for growth, and therefore the bank resorted to various sources of financing in the capital markets (and accordingly increased its dependence on them), which can sometimes be expensive and sensitive to unfavorable conditions.

URSA Bank is one of the largest regional banks in the country. According to the Interfax agency, as of April 1, URSA Bank closed the top twenty leading banks in terms of assets.

URSA Bank became the heir of the Novosibirsk Sibacadembank, to which in December 2004 the Yekaterinburg Uralvneshtorgbank was merged. Due to similar corporate cultures, the merger went relatively smoothly, but at the operational level, the banks' businesses are not yet fully integrated. URSA Bank ranks second after Sberbank in the Siberian Federal District and is one of the leading banks in the Urals Federal District. The Siberian and Ural FDs include 22 federal subjects and together occupy about 40.5% of the country's territory. At the end of March this year, 33.4 million people lived in the two districts. URSA Bank's network includes 21 regional branches, 239 branches, 4 representative offices and 360 ATMs.

At the end of March, the bank employed about 10,000 employees. The bank's development strategy provides for the optimization and efficiency increase of the existing network.

Experienced foreign shareholders (EBRD, DEG and Clariden Leu) are directly involved in shaping the bank's development strategy, and their representatives play a prominent role on the board of directors. The bank is run by a highly professional management team, but the presence of interested shareholders with an excellent understanding of banking provides additional support.

Mainly due to the rapid growth of assets, the bank has developed rapidly over the past three years, as a result of which its market share has increased sharply from a rather low level. The Bank actively developed the direction of unsecured consumer lending in most regions of its presence. Consumer loans generate very high returns, but are associated with increased risks, which results in a relatively high percentage of defaults.

The bank's rapid growth requires periodic capital injections. To prevent dilution of shareholders' stakes, the bank is rather actively issuing capital raising instruments without voting rights (for example, preferred shares). Such hybrid instruments combine the features of equity and debt. It should be noted that an excessive enthusiasm for the issue of hybrid instruments may negatively affect the perception of the quality of the bank's capital by both investors and rating agencies. The low level of the minimum dividend rate (approximately 3.86% per annum versus 9% for the previous issue) will become a mitigating factor used in the planned issue of preferred shares.

2.1.2 History and structure of the share capital of JSC URSA Bank

Sibacadembank (renamed URSA Bank in December 2004) was established and registered by the Bank of Russia in 1990. In 1998, Sibacadembank merged with the Russian People's Bank, and in 2001 - with the Kuzbass Transport Bank. In 2001, Sibacadembank acquired a controlling stake in the Blagoveshchensk Dalvneshtorgbank (now Vostochny Express Bank), which was sold in 2004. In 2003, the bank acquired 100 new ATMs from the German company Wincor Nixdorf International GmbH and in the same year became the owner of a 57.8% stake in the capital of the insurance company ZHASO, paying 33.8 million rubles for the package. URSA Bank considers participation in an insurance company as a financial investment; in addition, a non-exclusive business relationship has been established between the bank and the insurer. URSA Bank appeared in its current form on December 22, 2004, when Sibacadembank bought out all the shares of Uralvneshtorgbank, after which the credit and financial institution received a new name - URSA Bank.

Over the past four years, URSA Bank has been actively working not only with international commercial banks, but also with a number of large international financial institutions. In 2003, Sibacadembank entered into a five-year loan agreement for USD7 million with the International Finance Corporation (IFC), and in January 2005, Sibacadembank received a seven-year loan from Kreditantstalt fur Wiederaufbau (KfW) in the amount of USD 6.1 million for onward lending small and medium-sized businesses. In 2005, IFC provided Sibacadembank with a subordinated five-year loan in the amount of USD 6 million in order to increase the capitalization of the Russian bank. In December 2005, DEG and Clariden became the shareholders of Sibacadembank.

At a joint meeting held on May 17, 2004, the Supervisory Board of Uralvneshtorgbank and the Board of Directors of Sibacadembank discussed the possibility of merging the two credit institutions. As a result, the concept of the merger and a number of its parameters were approved, including the valuation of common and preferred shares of Uralvneshtorgbank and Sibacadembank in relation to the merger. Extraordinary general meetings shareholders of Sibacadembank and Uralvneshtorgbank, where the shareholders of the banks made a decision to reorganize by merging and approved other necessary documents.

Finally, on December 22, Sibacadembank completed the purchase of shares in Uralvneshtorgbank, after which ordinary and preferred shares of the latter were converted, respectively, into ordinary and preferred shares of Sibacadembank. URSA Bank determined the purchase price of Uralvneshtorgbank based on the valuation of the latter's shares, which were exchanged for ordinary and preferred shares of the additional issue of URSA Bank itself. As of the date of purchase, the aggregate value of Uralvneshtorgbank shares, according to URSA Bank, was RUB 8.6 billion. with a fair value of net assets of 2 billion rubles. and the cost of intangible assets in 6 billion rubles.

Both Sibacadembank and Uralvneshtorgbank had a developed branch network in various regions of the country. Sibacadembank was most fully represented in the Siberian Federal District, while Uralvneshtorgbank - in the Ural Federal District. It should be noted that the branch networks of banks were geographically adjacent, but did not overlap. This regional diversification is expected to allow the combined institution to increase its market share in both the corporate and retail segments, benefit from synergies in promoting its products and provide better protection in the event of a worsening economic situation in a particular region. In key markets (Siberian and Ural Federal Districts), URSA Bank ranks second in terms of assets, behind only Sberbank, and in the most “home” market of the Novosibirsk Region, URSA Bank even managed to outpace the country's largest bank.

Legally, the procedure for the merger of Sibacadembank and Uralvneshtorgbank was completed on December 22, 2004, but a number of remaining issues related to the merger have yet to be resolved. It is required, in particular, to unify product lines and conditions, form uniform standards for opening accounts and issuing loans, develop a unified personnel policy, switch to identical IT platforms, create a single processing center and data storage system for the URSA Bank network in the Ural and Siberian Federal Districts, and also complete the rebranding.

URSA Bank is controlled by a group of entrepreneurs (most of them have long been business partners) and foreign institutional investors (EBRD, DEG and Clariden Leu). The latter in total own more than 28% of the bank's capital. The board of directors currently has 11 members, including three representatives of foreign shareholders and two independent directors. Three committees have been established to strategic development, audit and compensation. The presence of Russian and foreign capital in the structure of URSA Bank's share capital is a favorable circumstance for the holders of the bank's liabilities. Although the majority shareholding belongs to Russian shareholders, they do not have a qualified majority on the board of directors, which means that they must listen to the opinion of strategic partners and independent directors.

2.1.3 Development strategy of OJSC "URSA Bank"

URSA Bank plans to further develop as a universal bank offering a full range of services for corporate and private clients in the key markets of the Ural, Siberian and Far Eastern Federal Districts. URSA Bank expects to increase its market share in both the corporate and retail segments and retain its second (after Sberbank) position in the main markets of operations. In addition, in the medium term, the goal is to become one of the ten largest banks nationwide. Even in conditions of tougher competition, the bank's tasks seem feasible.

Let's highlight the main elements of the strategy:

1. Cross-selling retail products existing clients.

The base of individual clients (both current and those who used the services of URSA Bank in the past) totals 2.8 million people. This scale of the client base is one of the key competitive advantages of URSA Bank. If in previous years URSA Bank in the retail segment almost entirely focused on attracting new customers, then in the future, significant attention will be paid to the sale of new products to existing customers of the bank. Since URSA Bank has already gained a better understanding of the needs of its clients and has studied their credit histories, cross-selling is expected to be targeted and ensure an improvement in the quality of its loan portfolio. In addition, URSA Bank expects to develop retail services by cross-selling banking products to employees of its corporate clients... In our opinion, if the bank succeeds in developing cross-selling successfully, it will be able to achieve the effect of diversification and increase revenues per client. To a certain extent, this can compensate for the negative consequences of a decrease in lending profitability.

2. Changing the structure of the portfolio of loans to individuals in the direction of increasing the share of less risky products.

Until last year, the rapid growth rates of the retail loan portfolio were mainly due to active development consumer lending and, to a lesser extent, car loans. But already last year, URSA Bank reoriented to less risky retail loans - mortgages, lending and credit cards. The implementation of the new strategy resulted in a noticeable change in the structure of URSA Bank's loan portfolio. Thus, the share of consumer loans in the total portfolio of loans to individuals decreased from 85% at the end of 2005 to 75% a year later, while the share of mortgage loans for the same period, on the contrary, increased from 1.1% to 17.1%. Developing mortgage lending, URSA Bank strives to make the most of its extensive branch network in the Siberian Federal District, as it is often the only credit institution offering mortgages in a particular area. Such a shift in the portfolio structure may become the main factor in reducing credit risks, which, of course, can only be welcomed. On the other hand, the circle of potential borrowers, whose savings are sufficient to make an initial mortgage payment, is largely limited, which means that URSA Bank can reduce the requirements for the amount of the loan from the borrower's own funds (usually 10-20%), which will lead to to a decrease in the quality of new loans.

3. Expanding the range of services for corporate clients

In order to attract new corporate clients and increase income from existing borrowers, URSA Bank continues to develop new loan products. In response to customer inquiries, the bank offered several new products last year, including project finance, leasing and mezzanine finance. URSA Bank hopes to obtain higher profitability on such transactions than on more traditional banking products. The new product launches are expected to boost the corporate loan portfolio and improve profitability without compromising credit quality. In our opinion, this direction promises good prospects, but we hope that the scale of more risky operations will be limited and risks controlled.

4. Lending to small and medium-sized enterprises.

URSA Bank actively lends to small and medium business since 2003 and plans to increase the volume of operations in this segment. Lending to small and medium-sized enterprises is one of the fastest growing areas of URSA Bank's business in the corporate segment, and, according to management, its presence in local markets and significant experience provide the bank with clear competitive advantages in key markets. As of March 31 of this year, URSA Bank's client base consisted of 12 thousand borrowers from small and medium-sized enterprises, and the loan portfolio reached 5.556 billion rubles. (6.8% of the total portfolio volume). Lending to small and medium-sized businesses is an important direction from the point of view of further diversification of the loan portfolio and increasing profitability without a disproportionate increase in risks.

5. Weighted development of the bank's network with an emphasis on efficiency.

URSA Bank's network plays a key role in expanding its client base in retail business and lending to small and medium-sized enterprises. During last year's rapid growth, URSA Bank opened 54 branches and offices. In 2007, URSA Bank expects a decrease in the growth rate of its branch network in comparison with previous years. In addition, in order to improve the efficiency of URSA Bank's work, it is intended to transfer part of the functions currently concentrated in the bank to third-party organizations.

All of the above measures to improve efficiency are essential in the face of heightened competition and mounting pressure on interest margins.

2.2 Analysis of the financial and economic activities of the bank

2.2.1. Analysis of the structure and dynamics of changes in the main indicators of the bank's activity

We will evaluate the results of financial and economic activities on the basis of the following documents:

1. Aggregated Balance Sheet 2005 and 2006

2. Aggregated income statement for 2005 and 2006

Table 1

Dynamics and structure of changes in balance sheet items
in 2005-2006 (OJSC URSA Bank) thousand rubles.

P / p No.	Articles		On 01.01.2006			01.01.2007	Change, (+ ;-)		Rate of change,	Share in foreign currency
										On 01.01.2006				01.01.2007		Change, (+ ;-)
1	2		3			4	5		6	7				8		9
I	ASSETS
1.	Cash		2201380			2947995	746615		133,92	5,095				2,811		-2,28
2.	Funds of credit institutions with the Central Bank of the Russian Federation		3042091			3017755	-24336		99,20	7,041				2,877		-4,16
3.	Mandatory reserves		535727			1095115	559388		204,42	1,240				1,044		-0,19
4.	Funds from credit institutions		534226			3061635	2527409		573,10	1,236				2,919		1,682
5.	Net investment in trading securities		1753690			2043737	290047		116,54	4,059				1,948		-2,11
6.	Net loan debt		29988696			77948758	47960062		259,93	69,41				74,31		4,899
7.	Net investments in securities available for sale		2286183			11890327	9604144		520,10	5,292				11,33		6,044
8.	Fixed assets and inventories		1693048			2810009	1116961		165,97	3,919				2,679		1,240
9.	Interest requirements		41859			104554	62695		249,78	0,096				0,100		0,003
10	Other assets		562202			1064737	502535		189,39	1,301				1,015		0,286
10	Total assets		43201069			104889507	61688438		242,79	100				100		0
	LIABILITIES
11	Funds of credit institutions		10434914			19172404	8737490		183,73	24,15				18,27		5,876
12	Customer funds (non-credit institutions)		23866350			64097345	40230995		268,57	55,24				61,10		5,865
13	Individual deposits		15559200			22641600	7082400		145,52	36,01				21,58		14,43
14	Debt issued		4028636			11032071	7003435		273,84	9,325				10,51		1,192
15	Interest obligations		352165			1212216	860051		344,22	0,815				1,156		0,341
16	Other liabilities		236297			342037	105740		144,75	0,547				0,326		0,221
17	Provisions for potential losses on credit related commitments		41172			118153	76981		286,97	0,095				0,113		0,017
18	Total liabilities		38959534			95974226	57014692		246,34	90,18				91,50		1,318
III	SOURCES OF OWN FUNDS
19	Funds of shareholders (participants)		1110700			1153129	42429		103,82	2,571				1,099		1,472
20	Share premium		1247306			3660089	2412783		293,44	2,887				3,489		0,602
21	Revaluation of fixed assets		42578			455295	412717		1069,3	0,098				0,434		0,336
22	Deferred expenses and forthcoming payments affecting equity (capital)		412237			1239751	827514		300,74	0,954				1,182		0,228
23	Funds and unused profits of previous years at the disposal of the credit organization		904408			2203319	1298911		243,62	2,093				2,101		0,007
24	Profit for distribution (loss) for the reporting period		1308729			2630169	1321440		200,97	3,029				2,508		0,522
25		Total sources of own funds		4201484	8862250			4660766			210,93	9,725	8,449		1,276
26		Share of small shareholders		40051	53031			12980			132,41	0,092	0,051		0,042
27		Share of own funds accepted by small shareholders		32265	46417			14152			143,86	0,074	0,044		0,03
28		Profit (loss) attributable to minority shareholders		7786	6614			-1172			84,95	0,018	0,006		0,012
29		Total liabilities		43201069	104889507							100	100		0

Based on the analysis carried out, the following conclusions can be drawn:

URSA Bank's capital ratios have come under pressure due to rapid asset growth over the past few years. Nevertheless, their values ​​met the requirements of the regulator and creditors, since the funds were raised mainly by issuing preferred shares (which combine the features of debt and equity financing), as well as attracting subordinated debt (i.e., tier two capital). The takeover of Uralvneshtorgbank was carried out only through the issue and exchange of shares.

During the analyzed period, the total value of assets increased by 61688438 thousand rubles. and its growth rate was 242%. This indicates an increase in capital due to the merger of banks.

The overwhelming majority of assets is "Net loan debt", which increased by 47,960,062 thousand rubles. This indicates the expansion of the range of provided credit operations.

In the reporting year, we also observe an increase in the amount under the item "Cash" by 746615 thousand rubles, or by 134%, and, at the same time, its share in the balance sheet total increased by 2.2%. This increase in the share of non-performing assets is a negative trend. This impact can have a negative impact on income levels.

The amount under the item “Net investments in trading securities” increased by 290,047 thousand rubles, and its growth rate was 116.54%. Despite this, its share in the balance sheet decreased by 2%, which indicates a decrease in the bank's attraction of non-traditional ways of making a profit.

The main correspondent account with the Central Bank in the reporting year amounted to 3,017,755 thousand rubles, which is 24,336 thousand rubles. less than in the previous one, which indicates the strengthening of the bank's position. This change also indicates a merger of banks, which indicates an increase in equity capital.

The amount under the item "Funds of credit institutions" in the reporting year increased by 8,737,490 thousand rubles. and its growth rate was 183%. The share in the balance sheet total was 24%, which is 6% more than in the base year. This is due to the increase in deposits of other credit institutions, which indicates that the bank has established itself as a reliable partner.

The adopted development strategy is confirmed by the increase in the amount under the item “Fixed assets, intangible assets and inventories”. The amount in the reporting year was 2810009 thousand rubles. against 1,693,048 thousand rubles. baseline, the growth rate was 165 percent.

A significant increase is observed in the item “Net investments in securities available for sale”. The amount in the reporting year compared with the base year increased by 9604144 thousand rubles. and the growth rate was 520%. This increase indicates an increase in the share of highly liquid assets.

In the reporting year, the amount under the item “Interest claims” amounted to 104554 thousand rubles, which is by 62,695 thousand rubles. more compared to the previous one, which indicates a deterioration in the quality of the loan portfolio.

At the expense of its own funds, 9.7% of all liabilities were formed in URSA Bank, attracted resources in the structure of liabilities account for 90.3%, which in general does not correspond to the existing structure in world banking practice, since the normal value of attracted resources should be the level of 80–85%. This testifies to the high dependence of the bank on borrowed funds.

The predominant share in the bank's liabilities is made up of funds of clients (non-credit organizations) - 55% or 64097345 thousand rubles, which is
40230995 thousand rubles. more than the base year. Of these, 36% falls on deposits of individuals. The reason is the bank's successful policy of attracting private clients.

In the reporting year, there is an increase in the item “Issued debt obligations” by 7003435 thousand rubles. and the rate of change was 273%. This fact indicates an increase in the volume of bond issue securities.

Increase in the amount under the item “Provisions for possible losses on contingent credit commitments, other possible losses and operations with residents of offshore zones” by 76,981 thousand rubles. or 287% due to the deterioration in the quality of the loan portfolio.

During the analyzed period, the bank's own funds increased by 4,660,766 thousand rubles. or 211 percent.

In particular, the growth of own funds, for the most part, occurred due to share premium by 2,412,783 thousand rubles. and due to the revaluation of fixed assets by 412,717 thousand rubles.

Profit to distribution for the analyzed period increased by 200% and amounted to 2,630,169 thousand rubles. against 405,626 thousand rubles. the previous year.

The bank's profitability is the result of the optimal structure of its balance sheet, both in terms of assets and liabilities, the target orientation of the bank's activities in this direction. Another important condition for ensuring the bank's profitability is the rationalization of the structure of expenses and income.

For valuation purposes, it is necessary to normalize the income statement. To do this, you need to delete the item "Net income from one-time transactions".

table 2

Profit and Loss Statement 2005 - 2006

(JSC "URSA Bank") thousand rubles.

p / p	Article title	2005 year	2006 year	Change, (+ ;-)	Rate of change,
1	2	3	4	5	6
Interest earned and similar income from:
1	Placement of funds with credit institutions	76182	129491	53309	169,976
2	Loans to customers (non-bank institutions)	2664872	6527797	3862925	244,957
3	Provision of services for financial leasing (leasing)
4	Fixed Income Securities	379248	779844	400596	205,629
Other sources	246930	511469	264539	207,131
5	Total percent of received and similar income	3367232	7948601	4581369	236,057
6	Interest paid and similar expenses on:
7	Funds raised from credit institutions	245155	723332	478177	295,051
8	Raised funds of clients (non-credit organizations)	1408041	2887855	1479814	205,097
9	Issued debt obligations	122077	540711	418634	442,926
10	Total interest paid and similar expenses	1775273	4151898	2376625	233,874

11	Net interest and similar income	1591959	3796703	2204744	238,493
12	Net income from operations with securities	206491	206313	-178	99
13	Net income from foreign exchange transactions	168440	-102516	-270956	-60,862
14	Net income from operations with precious metals and other financial instruments	-300	1432	1732	-477,333
15	Net income from revaluation of foreign currency	-42867	841564	884431	-1963,198
16	Fee and commission income	2122191	5616536	3494345	264,657
17	Commission expenses	220023	534265	314242	242,822
18	Net income from one-time transactions	62745	213682	150937	340,556
19	Other net operating income	-28995	63123	92118	-217,703
20	Administrative and administrative expenses	1979950	4269824	2289874	215,653
21	Provisions for possible losses	-224242	-1971449	-1747207	879,161
22	Profit before tax	1655449	3448673	1793224	208,323
23	Accrued taxes (including income tax)	338909	811890	472981	239,560
24	Profit (loss) for the reporting period	1253795	2423101	1169306	193,261

Based on the analysis performed, we will draw the following conclusions:

In 2006, compared to 2005, there is an increase in net interest income by RUB 2204744 thousand. Its growth rate was 238%. This is due to an increase in interest income by 4,581,369 thousand rubles. (236%) and an increase in interest expenses by 2,376,625 thousand rubles.

The growth of interest income, in turn, is due to a significant increase in interest received from the placement of funds in credit institutions by 53,309 thousand rubles, the growth rate was 170%; you can also observe a sharp fluctuation in positive side on loans provided to non-credit organizations in the amount of 3862925 thousand rubles. or 245 percent.

Compared to 2005, net fee and commission income is growing and amounts to, respectively, in 2006 5616536 thousand rubles.

During the analyzed period, negative amounts are observed under the item “Provisions for possible losses”.

During the analyzed period, there is an increase in profit before tax by 1,793,224 thousand rubles. Its growth rate was 208 percent.

The accrued taxes increased and in 2006 amounted to 811,890 thousand rubles. against 338,909 thousand rubles. 2005 Net profit increased in the reporting year in comparison with the previous year by 1,169,306 thousand rubles. or 193%. This growth can be justified by the positive results of activities in many articles of the report.

2.2.2 Analysis of liquidity of OJSC "URSA Bank"

In order to control the state of the bank's liquidity, that is, its ability to ensure the timely and complete fulfillment of its monetary and other obligations arising from transactions using financial instruments, the standards of instant, current, long-term liquidity are established, which regulate (limit) the risks of loss of liquidity by the bank.

The bank's instant liquidity ratio (N2) regulates (limits) the risk of the bank losing liquidity within one operating day and determines the minimum ratio of the amount of the bank's highly liquid assets to the amount of the bank's liabilities on demand accounts. The minimum permissible numerical value of the H2 standard is set at 15 percent.

The bank's current liquidity ratio (N3) regulates (limits) the risk of loss of liquidity by the bank within the nearest time to the date of calculation of the ratio 30 calendar days and determines the minimum ratio of the amount of the bank's liquid assets to the amount of the bank's liabilities on demand accounts and for a period of up to 30 calendar days. The minimum permissible numerical value of the H3 standard is set at 50 percent.

The bank's long-term liquidity ratio (N4) regulates (limits) the risk of the bank losing liquidity as a result of placing funds in long-term assets and determines the maximum allowable ratio of the bank's credit requirements with the remaining maturity date over 365 or 366 calendar days to the bank's own funds (capital) and liabilities (liabilities) with the remaining maturity date in excess of 365 or 366 calendar days.

Table 3

Liquidity indicators of JSC URSA Bank as of 01.01.2007

(1) - an explanation of the formulas is presented in Appendix 1.

H2 - exceeds the normal value more than 2 times. Due to this, the risk of losing liquidity within one business day for this bank is practically absent. In addition, there is a significant reserve for attracting demand deposits, if necessary.

Н3 - exceeds the established minimum by 1.57 times. This ratio indicates that there is no risk for the bank to lose liquidity within the next thirty calendar days.

Н4 is 8% close to the maximum permissible value, which indicates the undesirability of attracting a larger mass of long-term deposits before the bank's borrowers repay long-term loans.

Н5 exceeds the established value by 2.44 times, which indicates a high level of financial stability, which makes it possible to attract additional deposits (liabilities), as well as form funds to cover potential losses from the occurrence of insurance situations associated with credit, market, operational and other types of risks ...

From the analysis carried out, it can be concluded that the bank does not risk losing liquidity. Therefore, the bank achieves normal values ​​of mandatory ratios by manipulating amounts in reserves accounts to cover market, operational and other types of risks.

2.2.3 Analysis of financial results

To analyze the financial results of the bank's activities, the data of the balance sheet, the income statement for the corresponding period are used.

Table 4

Financial results of the activities of OJSC URSA Bank for 2005-2006

Name indicator	Calculation formula and conventions	Indicator value in the previous period,%	Indicator value in the reporting period,%
The general level of profitability of the bank (the ratio of the balance sheet profit to the bank's total income)	BP / D 100, where BP - balance sheet profit, D - general income, reduced by the amount of restored reserves	14	28,2
Financial margin (the ratio of book profit to net operating income	BP / CHOD * 100, where BP - balance sheet profit. CHOD - net operating income	15,5	19,5
Interest margin (the ratio of interest income to% investment)	(Dpr-Rpr) / (% +) * 4 * 100, where Дпр - interest income Рпр - interest expenses % А + - average volume of% investments	9,7	10,8
Return on operating assets (the ratio of the balance sheet profit to the average volume of working assets)	BP / (A +) * 4 * 100, where BP - balance sheet profit A + - average volume working assets	1,5	1,7
Return on All Assets (ROA) (the ratio of the balance sheet profit to the average volume of all assets)	BP / A * 4 * 100, where BP - balance sheet profit A - the average volume of all assets (balance sheet currency)	1,9	3,3
Return on Equity (ROE) (the ratio of the balance sheet profit to the average capital for the quarter)	BP / K * 4 * 100, where BP - balance sheet profit K - capital	24,6	29,6

URSA Bank remains quite profitable, despite strong pressure on the interest margin, and continues to pleasantly surprise with its financial results. The latter is largely due to the bank's initial focus on high-yield credit products (in particular, unsecured consumer loans with a gradual transition to credit cards).

URSA Bank, however, is not the leader in terms of costs. With such an extensive business model, the bank allowed itself not to tightly control operating costs (including loan losses). This should change over the next few years, with more emphasis on containing growth and optimizing costs. While the bank has made significant gains in efficiency in recent years, it still has room to strive for.

The total profitability at the end of the reporting period exceeds its value in the previous one by two times. A significant increase in profit during leads to an increase in the overall level of profitability.

The financial margin exceeded the value of the previous period by 4% due to the share of working assets and amounted to 19.5%, therefore, the share of net operating income in the formation of profit increased, but still remained insignificant. This is a normal tendency for a bank, since its profit should be formed at the expense of interest income.

The interest margin increased by only 1% and amounted to 10.8%. This indicates a trend towards an increase in the efficiency of financial investments, but in the reporting period, this trend has only been outlined. By itself, the increase in the indicator is not significant.

The value of the return on all assets increased by 1.4% and amounted to 3.3%. This happened due to the diversion of the share of working assets into the cash item, which is extremely undesirable given the trend of growth in the efficiency of working assets.

Return on equity increased by 5%. This is due to increased profits and efficient use of capital.

The development of URSA Bank over the past several years has taken place against the background of outstripping asset growth. Since the basic growth rate of deposits was lower than the growth rate of issued loans, the bank's dependence on borrowings in the domestic and especially foreign markets has increased significantly.

The bank's increased focus on borrowing in the financial market led to a sharp increase in the ratio between loans and deposits.

The bank expects the gap between the growth rates of loans issued and deposits to narrow as the market matures. Meanwhile, the bank will turn out to be highly dependent on the debt capital markets, which will make it vulnerable to the changing environment and mood of the investment community. Retail deposits account for the lion's share of funds on personal accounts of URSA Bank, which makes its client base rather highly diversified. Looking ahead, URSA Bank intends to make even more efforts to raise funds from current and new corporate clients for further diversification of funding sources and cost management.

URSA Bank's assets and liabilities appear to be well balanced in terms of maturity, which again reassures us that the bank is very prudent in managing its liquidity.

Summing up the second section, we draw a conclusion regarding the assessment:

Since when evaluating goodwill by means of the difference between the value of a company and the market value of all its assets, we need to determine the market value of the business, and the results of the analysis allow us to justify the following aspects. There were no analogues of such mergers on the Russian market, and this justifies the rejection of the comparative approach. The use of the cost-based approach in this case is unreasonable, since we are evaluating the operating business. Since the bank is steadily and actively developing, therefore, the most objective results will be given by an income approach. But since URSA Bank as a new legal entity has not been operating for long, it is impossible to conduct a retrospective analysis and, accordingly, forecast cash flows, which is required by the discounted cash flow method. If we take the statements of Sibakadem and Uralvneshtorgbank separately, then we will get distorted data, therefore, when evaluating goodwill by the method of exceeding the market value of a business over the value of its assets, it would be advisable to use the profit capitalization method.

CHAPTER 3 RATIONALE OF THE MARKET VALUE OF GOODWILL OJSC "URSA BANK"

3.1 Valuation of goodwill as an estimate of the difference between the market value of a company and the value of all its assets

When using this method of exceeding the market value of a business over the value of its assets, let us focus on the business valuation by capitalizing profits. The profit capitalization method is one of the methods of the income approach.

Consider the practical application of the profit capitalization method in stages:

· Analysis of the financial statements of the enterprise;

· Determination of the amount of profit that will be capitalized;

· Calculation of the capitalization rate;

· Determination of the value of the business value of the enterprise.

Determining the amount of profit that will be capitalized is actually the choice of the period of time for which the profit is calculated:

· Profit of the last reporting year;

· Profit of the first forecast year;

· The average profit for the last 3-5 years.

In order to assess the value of goodwill of OJSC URSA Bank, we will take the profit of the last reporting year, since the calculated indicators of both the profit of the first forecast year and the average profit for the last 3-5 years will not be reliable, due to the lack of retrospective information of OJSC URSA Bank as a single legal entity. Thus, we take the profit of the last reporting year from the normalized income statement, which is 2,423,101 thousand rubles.

The calculation of the capitalization rate is usually based on the discount rate by deducting the expected average annual growth rate of profit, to exclude the risks associated with the possibility of non-profit from the discount rate. To determine the discount rate, the following methods are most often used:

· Capital assets valuation model;

· Model of cumulative construction;

· The model of the weighted average cost of capital.

The discount rate and the capitalization rate are similar in their economic essence and are interrelated (mathematically, the capitalization formula is a modified discount formula, with the number of forecast periods tending to infinity). Since the bank plans to continue its activities indefinitely, the relationship between the discount rate and the capitalization rate can be expressed by the formula:

R = i - g, (5)

where R is the capitalization rate;

i is the discount rate;

g - expected rates of growth (decline).

Based on the formula, we conclude that we need to calculate the discount rate. Since banking is characterized by a wide range of risks, the most reliable calculation of the discount rate will be the method of cumulative construction.

The essence of the cumulative construction method is to summarize the risks determined, often by expert advice.

In accordance with the original “cumulative discount rate method” published in the Business valuation Review, December 1992, the following risk factors are considered, ranging from 0% to 5%:

· A key figure in the leadership; quality of leadership;

· The size of the company;

· Financial structure (sources of financing for the company);

· Commodity and territorial diversification;

· Diversification of the clientele;

· Income: profitability and predictability;

· Other special risks.

In accordance with this method, the final discount rate is calculated using the formula (6):

R = Io + Σ (Kp), (6)

where I o - risk-free rate;

Cr - risk factors listed above.

As a risk-free rate, rates of return on government securities are usually considered. In Russia, such assets can be considered, GKO-OFZ, Russian Eurobonds Russia-30 with a maturity of 30 years.

As of November 2007, the rate of return on government securities is 6.43%, according to the Central Bank of the Russian Federation.

So, let's calculate the discount rate using the cumulative construction method. The calculations are presented in Table 5.

Table 5

Discount rate calculation

Risk factors	(yes, no, no data)	Meaning
Key figure in leadership; quality of leadership
Profile education of top managers	not all	1%
Work experience of top managers in this area for over 3 years	not everyone	1%
Profile education of the head (general director)	Yes	0%
Work experience of the head in this area for over 5 years	Yes	0%
The time of work of the head in the position is more than 2 years	Yes	0%
There is sufficient internal staff reserve	No	5%
Sum of values:		7%
		6
		1,17%
Company size
Net assets above or equal to the industry average	Yes	0%
Revenue is greater than or equal to the industry average	Yes	0%
Net income is greater than or equal to the industry average	Yes	0%
The volume of the balance sheet is greater than or equal to the industry average	No	5%
Average headcount is greater than or equal to the industry average	no data	2,5%
The presence of a network of branches	Yes	0%
Sum of values:		7,5%
Number of constituent factors:		6
The final value of the risk factor:		1,25%
Financial structure (sources of funding)
The value of the solvency ratio meets the standard values	Yes	0%
The value of the current liquidity ratio meets the standard values	Yes	0%
The autonomy ratio is greater than or equal to the industry average	No	2,5%
The value of the ratio of the ratio of borrowed and own funds is less than or equal to the average value for the industry	No	2,5%
The value of the concentration ratio of attracted capital is less than or equal to the average value for the industry	No	5%
Sum of values:		10%
Number of constituent factors:		5
The final value of the risk factor:		2%
Commodity and territorial diversification
Wide range of services	Yes	1%
Constant (non-seasonal) demand for services	No	5%
Continuous optimization of banking services	No	5%
Working with foreign contractors	Yes	2%
The presence of a regional network of branches	Yes	0%
Sum of values:		13%
Number of constituent factors:		5
The final value of the risk factor:		2,6%
Clientele diversification
Availability of government clients	No	5%
Availability of corporate clients	Yes	0%
Private clients	Yes	0%
Availability of foreign clients	Yes	0%
Equal distribution of the total revenue by customers (the absence of one or more customers that form the dominant part of the revenue)	No	5%
Sum of values:		10%
Number of constituent factors:		5
The final value of the risk factor:		2%
Revenues (profitability and predictability)
The value of the return on fixed capital ratio is higher than the industry average	Yes	0%
The value of the return on equity ratio is higher than the industry average	Yes	0%
The value of the profitability ratio of the main activity is higher than the average values ​​for the industry	Yes	0%
The value of the coefficient of sustainability of economic growth is higher than the average values ​​for the industry	No	5%
The uniformity of changes in the main financial indicators in retrospect (for 3-5 previous years)	No	5%
Sum of values:		10%
Number of constituent factors:		5
The final value of the risk factor:		2%
Special banking risks
Moderate (or low) competition in the industry (one or more competitors)	No	5%
Annual (quarterly) internal audit	Yes	0%
The number of overdue loans is above the industry average (credit risk)	Yes	5%
The occurrence of losses as a result of non-fulfillment of obligations by foreign counterparties due to economic, political, social changes (country risk)	no data	1,5%
High degree of employee disruption functionality used credit organization information, technological and other systems (operational risk)	Yes	5%
Non-compliance by the credit institution with the requirements of regulatory legal acts and concluded agreements, imperfection of the bank's legal system (legal risk)	No	3%
Possibility of losses due to unfavorable changes in market prices for stock values ​​(stock risk)	Yes	5%
Possibility of losses due to unfavorable changes in the rates of foreign currencies and (or) precious metals on positions opened by a credit institution in foreign currencies and (or) precious metals (currency risk)	Yes	5%
Possibility of occurrence financial losses(losses) due to unfavorable changes in interest rates on assets, liabilities and off-balance sheet instruments of a credit institution (interest rate risk)	Yes	5%
Sum of values:		34,5%
Number of constituent factors:		9
The final value of the risk factor:		3,8%
Risk-free rate:		6,43%
The sum of the indicators of all risk factors		14,1%
Total discount rate (sum of all risk values ​​and risk-free rate):		20,53%

Explanations for calculating the discount rate:

Banking activities are recognized commercial activities, that is, one that is aimed at obtaining a certain profit... The main, fundamental characteristic of any entrepreneurial activity is risky in nature.

By risk factor “Key figure in leadership; quality of leadership ”by almost all criteria zero risk. This is due to the high qualifications of the bank's top management. On the aspect of the adequacy of the internal personnel reserve, high risk due to constant staff turnover. There is also a risk of lack of experience in individual personnel units.

As for the size of the company, as a result of the merger, the bank significantly increased its capital, which entailed a zero percentage of risk in many aspects of this group of risks.

Considering the risks associated with financial structure, then 2.5 percent risk is stated for the insufficient level of the autonomy ratio (since the share of own funds accounts for 9% of the balance sheet total), and the industry average is 15-20 percent.

In terms of the diversification of the clientele, the main risks are associated with the uneven distribution of revenue among clients, that is, the loss of a large client can cause an imbalance in the bank's activities.

The profitability indicators meet the established criteria and, therefore, the risk is zero.

High competition in the industry translates into a 5 percent risk value. Since OJSC “URSA Bank” has such a focus in its activities as the issuance of high-risk loans, the number of overdue loans is higher than the industry average.

The presence of operational risk in the bank is associated with high staff turnover and a large number of interns.

Since banking activities are largely inherent in the risks associated with external environment, then the possibility of losses due to unfavorable changes in market prices for stock values ​​(stock risk), the possibility of losses due to unfavorable changes in foreign exchange rates (currency risk), the possibility of financial losses (losses) due to unfavorable changes in interest rates on assets, liabilities and off-balance sheet instruments of a credit institution. All these positions are assigned a five percent risk level.

Thus, the real discount rate at the time of valuation is 20.53 percent.

Since the calculation of the capitalization rate requires the value of long-term income growth rates, but the lack of retrospective information does not allow us to make a reliable calculation, then we turn to the calculated indicators independent experts... Since banking activity is strictly regulated, arouses great interest of various groups of interested and independent persons, the largest merger of two Russian banks could not go unnoticed. According to data published by independent agencies Moody's, RusRating, Fitch, the average annual growth rate will be about 4.7%.

R = 20.53% - 4.7% = 15.83%.

Determination of the value of a business by the capitalization method is carried out according to the formula:

where V is the cost;

I is the amount of profit;

R is the capitalization rate.

Thus, we will calculate the value of the business of OJSC URSA Bank:

V = 2,423,101,000 / 15.83% = 15,307,018,320 rubles.

Since the value of goodwill is calculated as the difference between the value of a business and the value of all its assets, we will take the value of assets of OJSC URSA Bank from the consolidation report, which is 10,590,648,790 rubles.

Now we have all the data necessary for calculating the value of goodwill of OJSC URSA Bank:

GW = 15 307 018 320 rubles. - 10 590 648 790 rubles. = 4 716 369 530 rubles.

3.2 Economic feasibility of assessing goodwill of OJSC "URSA Bank"

Since 28% of the capital of OJSC URSA Bank belongs to foreign investors, and foreign partners are also members of the board of directors and the board of the bank, the provision of financial statements in accordance with international standards is an essential condition for the effective functioning of the system.

Since in IFRS goodwill is separated into a separate item and is subject to reflection in the financial statements, the process of its assessment is quite reasonable. There are still no such indicators in the international reporting of Russian banks. The associations “Uralsib” and “Investsberbank” that have passed the way were less focused on foreign investors, and therefore the provision of IFRS did not seem expedient to them. Since there are no such large associations, the priority for reflecting the value of goodwill belongs to OJSC URSA Bank. Banking sector representatives and top managers agree on the need for market valuation of the bank's goodwill, as interested people get more reliable information, which leads to the overall transparency of the banking system.

In reporting on Russian standards goodwill would have been recognized as an inappropriate asset. In international reporting, it carries a different meaning: the bank's owners show that the merged URSA Bank in the coming year will be able to earn 4,716,369,530 rubles. more than Uralvneshtorgbank and Sibacadembank would bring separately. This reflects economic efficiency merger of two banks.

As for attracting additional financial injections due to the cost of goodwill, it should be said that today more than 70% of capitalization, for example, on the London Stock Exchange, falls on the company's goodwill and this trend is growing. In the Russian banking sector, during the year most of the banks whose shares are traded on the stock exchange were valued more expensively - their value was almost five times their capital. For the owner, the positive goodwill of the company is not just words, it is money, for example, the value of shares on the stock exchange. The owners invest their efforts in increasing this goodwill, as well as constantly monitoring, thus controlling the level of changes in the value of their business.

In order to assess the impact of goodwill on the change in the amount of the company's equity capital during the period of additional share issues, along with the exchange quotes required to calculate the market capitalization indicator, it is advisable to consider the sale prices of shares during the issue period, and along with the company's net assets - the discounted prices of shares of previous issues. multiplied by the corresponding number of issued shares.

Since URSA Bank shares are traded on stock exchanges, the results of transactions are public. If we consider the previous issue of preferred shares, the number of which amounted to 1 million units. and the planned issue of the same number of shares, then through simple calculations you can see the economic effect of the impact of goodwill on the share price.

According to the data of transactions on the purchase and sale of shares, which are traded on the RTS, the fair value of the preferred shares of URSA Bank is estimated at $ 2.47. Excluding goodwill, this is in line with the bank's valuation of 5.8 in equity. Accordingly, the share of goodwill in the share price accounts for 4.2 capital, i.e. 42 percent.

Considering that the share of goodwill in the share price remains at the same level during the planned issue, i.e. 42%, then the goodwill we calculated allows us to find the total cost of the planned share issue:

(4,716,369,530 rubles * 100%) / 42% = 11,229,450,000 rubles.

Given the number of shares of the planned issue, we can determine the price of one share:

11,229,450,000 rubles / 1,000,000 pcs. = RUB 11,229

For convenience, we will translate the price of one share of OJSC URSA Bank on the exchange market for an already completed transaction in rubles:

$ 2.47 * 35 rub. = 86.4 rubles.

Thus, now we can compare two prices per share and, all other things being equal, we see an increase in the share price in the planned issue of shares by 11,142.6 rubles. (11,229 rubles - 86.4 rubles = 11,142.6 rubles). This is influenced by the increase in the value of the bank's goodwill, which is a positive trend in its development. Taking into account the results obtained above, we can conclude that, by managing the company's goodwill, we control the price of the issued shares and, in fact, receive real additional financial injections due to practically "air size", i.e. goodwill.

Monitoring the effectiveness of financial decisions based on the assessment of goodwill is a system for analyzing, evaluating, diagnosing and correcting financial decisions that lead to a change in the value of the enterprise. Monitoring allows you to take into account the impact of goodwill on the increase in the value of the enterprise, as well as the role of subjective assessments of investors and other counterparties in making financial decisions, with the lowest labor costs and more quickly diagnose and correct financial decisions.

CONCLUSION

In the context of increased competition associated with the liberalization of domestic markets, the processes of globalization of the world economy, against the background of constant growth in stock markets, the deviation of the market capitalization of enterprises from the value of their real assets - enterprises need an effective financial management system that takes into account the role of goodwill in shaping their value.

The need to conduct a professional value of goodwill is increasing, which directly emphasizes the relevance of the topic under study.

The study of goodwill, based on the analysis of various approaches to its interpretation, made it possible to define goodwill as a set of inseparable intangible advantages of an enterprise that can bring it extraordinary profits and act as resources used in financial and economic activities. The deviation of the selling price of the entity from the value of its net assets is due to the reimbursement of the value of goodwill, which for the acquirer is acquired goodwill.

Goodwill is classified according to the following criteria: by the type of relationship, by the possible alienation of goodwill in favor of other persons, by the degree of impact on the financial result of the enterprise, by the forms of manifestation in the reproduction process, by the degree of control over the acquired goodwill, by the level of manifestation in the economic system - goodwill enterprises, goodwill regional, goodwill national.

For the purposes of this course work, the economic, created, positive goodwill of the bank is investigated.

The analysis of various methods for assessing goodwill made it possible to identify the most appropriate method for assessing the goodwill of OJSC URSA Bank.

It is a method of assessing the difference between the value of a company and the market value of all of its assets.

Analyzing the banking sector, the directions of the bank's activities and its reporting, we conclude that there were no analogues of such mergers on the Russian market, and this justifies the rejection of the comparative approach. The use of the cost-based approach in this case is unreasonable, since we are evaluating the operating business. Since the bank is steadily and actively developing, therefore, the most objective results will be given by an income approach. But since URSA Bank has been operating as a new legal entity for only two years, it is impossible to conduct a retrospective analysis and, accordingly, forecast cash flows, which is required by the discounted cash flow method. Consequently, when evaluating goodwill by the method of exceeding the market value of the business over the value of its assets, it would be advisable to use the method of capitalization of profits.

In the third chapter, we calculate the market value of goodwill required to be reflected in IFRS and assess the impact of the increase in the value of goodwill on the value of the issued shares.

Based on the assessment of goodwill, it is possible to assess the effectiveness of financial decisions that lead to a change in the value of the enterprise. Monitoring allows you to take into account the impact of goodwill on the increase in the value of the enterprise, as well as the role of subjective assessments of investors and other counterparties in making financial decisions, with the lowest labor costs and more quickly diagnose and correct financial decisions.

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Annex 1

Decoding of indicators in the formulas given in table 4:

Lam - highly liquid assets, that is, financial assets that must be received within the next calendar day and (or) can be immediately claimed by the bank and (or), if necessary, sold by the bank in order to immediately receive funds, including funds on correspondent bank accounts with the Bank of Russia, in banks of countries from among the "group of developed countries", the bank's cash desk.

OVM - liabilities (liabilities) on demand, for which the depositor and (or) the creditor may be required to repay them immediately.

Lat - liquid assets, that is, financial assets that must be received by the bank and (or) can be claimed within the next 30 calendar days and (or), if necessary, sold by the bank within the next 30 calendar days in order to receive funds on the specified terms.

Ovt - liabilities (liabilities) on demand, for which the depositor and (or) the creditor may be required to repay them immediately, and the bank's obligations to creditors (depositors) with a due date within the next 30 calendar days.

Кр - credit claims with the remaining maturity date of more than 365 or 366 calendar days, as well as prolonged ones, if, taking into account the newly established maturity of credit claims, the terms remaining before their repayment exceed 365 or 366 calendar days;

OD - liabilities (liabilities) of the bank on loans and deposits received by the bank, as well as on the bank's debt obligations circulating on the market with the remaining maturity of more than 365 or 366 calendar days.

How often do we apply for certain services to various companies that our acquaintances have advised us? Why do we buy the most advertised products? Is it not just that manufacturers spend a lot of finance to improve their own reputation, bother with its assessment, and resell to other owners, deliberately overstating its value? We will talk about goodwill and its accounting features in the article below.

as a successful business

Goodwill - what is it? Literally, “business reputation”. But we are not talking about that now. What does an entrepreneur need to run his own business? What is needed for it to be in demand and make a profit? Undoubtedly a positive assessment from outside organizations. Nowadays, this aspect of business is more and more influencing the minds and behavior of the population. Because, as the statistics for recent years show, it is this that our legal entities are trying to justify in court.

Therefore, if some information discrediting the good name of a business entity has become public, then he has full civil right to challenge the legality of what happened in the manner prescribed by law. Business reputation, although it is a rather abstract concept, nevertheless, is a rather valuable intangible asset of the enterprise.

Goodwill: definition of the concept

Entrepreneurs make huge investments in brand development and advertising. Business reputation, or, as it is also called, goodwill (not to be confused with the goodwill filter), is quite expensive for business entities, and therefore they value it at the appropriate level.

So what is this concept? Let's consider the question in stages:

• a strong team of good advertisers and a well-developed strategy for brand promotion should always be at the core;
• further needed for the highest level the work done to promote the company;
• in the end, the company must be distinguished by its good corporate culture and well-established relationships with contractors.

In other words, goodwill is an overall assessment of a business's performance, which, as a result - due to its reputation - allows an increase in its own working capital, since people want to consume this particular product and no other. It is interesting that many business entities tend to exaggerate their own importance, and this is quite fruitful for them - the value of the company increases markedly.

Goodwill Interpretations in Economic Theory

With the passage of time and the dynamics of business change, the interpretation of this concept changed depending on external circumstances. For example, have you heard from your parents, and even more so from your grandparents who lived, say, under Stalin, about such a term as goodwill? Nobody in the Soviet Union knew what it was. This concept simply did not exist. IN theoretical aspect the term "business reputation" was listed, but it rather had a certain psychological definition. It could be defined as the aggregate opinion of consumers about a particular company, but at the same time there was no talk of goodwill as a valuable intangible asset. This is understandable - in the regime of the planned economy of that time, there was simply no need to expand this concept.

The term "goodwill" came to us from the United States, and there it even a hundred years ago meant a certain established value of business contacts, which could subsequently lead to an increase in profits by several points. In other words, in America, this intangible asset has always had a value.

How does it differ from other assets

What is goodwill according to It is a special intangible asset that has a number of specific features that distinguish it from others:

• under no circumstances can a business reputation exist independently of a specifically linked company;
• he is insubstantial, which means that his absence as such may not be noticed;
• goodwill has no initial introductory or operational value, and in some reporting templates it is estimated at a symbolic amount of several dollars;
• if the value of other intangible assets in value terms is distributed according to the volume of production, then the amount of goodwill can be repaid at any time, and at the same time, as such, it will not disappear.

Goodwill as an economic category

Goodwill - what is it? It is a complex concept that can be classified according to several criteria. For example, by how it can affect the financial statements of a business entity:

• positive - when we use it, we also get a good income;
• negative - accordingly, it not only does not make a profit, but also underestimates the estimated value of the enterprise as such.

Or, according to the form of existence, goodwill is:

• created - developed over the years, through a competent marketing policy;
• accounting - is acquired for a certain cost in cash and is included in the financial statements.

It can also be classified according to the documentary method of reflection in these characteristics of the company:

• market - when not only the purchase price, but also the profit obtained is involved in the procedure for assessing its value;
• normative - when determining its value, the auction value in the market is also taken into account.

Income valuation methods

Often the valuation method for goodwill is to determine the profit that it can bring to the entity. So, there are two income methods for determining its value.

For example, goodwill can be measured as the residual value between the difference between the total present value of the assets of the enterprise and its full price. It is clear that there will be no problems with the first subtracted one - all you need to do is add up all the indicators. As for the cost of the business itself, then it should be approached in an integrated manner: either apply comparative analysis, or based on indicators of profitability.

Alternatively, goodwill can be determined based on the surplus profit available. In this case, the main thing is to determine the planned profitability without using goodwill in the business, and then calculate how much it can bring.

Other valuation technique for goodwill

Business reputation can be assessed based on the data on the business entity. So, for example, the value of goodwill is calculated based on the volume of products sold:

(Received net income from operating activities - the level of profitability in the context of the industry * The total cost of goods that were sold) / Capitalization indicator of other intangible assets.

You can also use the cost price to assess the goodwill. Such a calculation of goodwill is somewhat similar to the method of calculating excess profit, but now we are assessing not the dynamics of changes in the latter, but how the application of the concept we are considering affects the total cost.

And the last, least commonly used one is qualimetric. In this methodology, we assess the overall usefulness of a business entity and compare it with the amount of direct goodwill.

Features of goodwill in different countries

So, as we have already found out, the term "goodwill" itself did not exist in Soviet Russia, but nevertheless, if we recall the tsarist times, the authority of this concept was still present, albeit tacitly. Imagine how local traders would manage without a good business reputation among neighbors and residents of the surrounding areas. And in our time, despite the active use of this concept in business, there are no legislatively regulated documents that determine the status of goodwill. But nevertheless, now in Russia professional appraisers of business reputation are gaining wide popularity, who will not only select the best way to calculate its value, but also carry out all the necessary calculations.

But in the United States, on the contrary, goodwill is not only actively taken into account in the development of its own business, but is also regulated by law by the Ministry of Finance and the Internal Revenue Service.

The need to measure goodwill

Determining the value of goodwill often has good reasons, since the procedure is quite expensive and complicated. As a rule, it is carried out if the business is planned to be sold or bought in the near future.

Undoubtedly, the value of the material assets of an enterprise is a very important factor of influence, but it is no less important what reputation the manufacturer has earned over the years of its activity, how much consumers trust him, and how popular his product is. Indeed, as mentioned above, it is these factors that can significantly raise the value of a business.

Goodwill is also assessed during a merger or acquisition, since it is also important here to understand what matters are going in the hands. After all, if, in the intangible aspect, the deal is not profitable enough for one of the parties, so why conclude it?

How to prepare for a business reputation assessment

What is goodwill? This is primarily an intangible asset, therefore, it must be valued accordingly. So, to carry out the procedure for determining the value of business reputation, the following documents are required:

• complete financial statements in the context of the last three years;
• if any, audit reports;
• a complete inventory of material assets available in the possession of the company;
• other deciphered and explained information about the property of a business entity;
• information on accounts receivable in the context of contracts;
• if available, their complete financial statements.

Every year the service sector is becoming wider and wider: we are offered legal and accounting advice, and there are so many hairdressers and beauty salons that you can stumble upon them literally at every step! But this does not mean at all that each of these establishments brings unprecedented profits to its owner. First, you need to earn a decent reputation, gain an impressive client base. This is all the goodwill of the company consists of.

Who needs goodwill especially

Since there are not so many tangible assets on the balance sheet of such business entities, in order to establish a decent price for property in the form of a cafe or a nail salon, it is necessary to offer the buyer a brand of the proper level. It is the business reputation in this case that will take almost half of the cost of the enterprise.

Accounting for goodwill in the Russian Federation

Taking into account the fact that many enterprises are successfully transitioning to International Financial Reporting Standards (IFRS), we will consider business reputation accounting in this very aspect.

According to postulate No. 38, goodwill can only be reflected when an enterprise is bought or sold, but in no other way. Since it is incorrect to assess an asset, which, in fact, is practically not such, and to award it with any kind based on subjective considerations is very wrong.

Moreover, in accordance with Standard No. 22, after the sale and purchase transaction, the recorded value of goodwill must be allocated to certain non-current assets. Since the value as such is paid for, it follows that it needs to be backed up with something material. Often, the latter are fixed assets that have their own certain level of wear and tear.

What to do if goodwill is negative

Goodwill - what is it? This is an intangible asset that is not usually identified and acquired separately from a business entity.

Sometimes situations arise when funds have been paid for a particular company, which in fact are less than what it implies. assessed value all assets of the business. In this case, it follows that goodwill played a decisive role here, and the transaction was completed at a loss to the seller.

Therefore, if a positive business reputation as an intangible asset is further distributed according to the value of the fixed assets available at the enterprise, then the negative, in turn, will be reflected on the balance sheet of the business entity under account number 192. And, alas, you cannot do anything with it will be obtained before the next deal is concluded.

Goodwill is the advantages that a buyer receives when buying an existing and operating company, compared to setting up a new company. However, the sale of the company is not required to measure goodwill. In Russian, this word has a synonym - business reputation.

The large number of corporate mergers and acquisitions in the West, in which companies were acquired at much higher prices than the value of assets, is a vivid proof that there is something intangible, possibly inseparable from the company itself, but radically changing the value of a business. For this something they usually use the term "goodwill", from the English Goodwill, which literally means "goodwill", i.e. the buyer's willingness to pay more than the total value of the assets.

Dates and prices

	Moscow Moscow region Regions Cost, rub. 45 000 45 000 45 000 Timing, slave. days 10-25 10-25 10-25

When an assessment is needed

1. Buying or selling a business is the most significant reason when it is critical to measure goodwill.
2. Mergers and acquisitions of enterprises and companies;
3. Making management decisions

Peculiarities of goodwill valuation

Valuation of this intellectual property and other unidentifiable assets is usually associated with some identifiable asset, including a trademark or brand.

For most tasks, determining the market value of a firm's business reputation (goodwill) consists in determining the totality of those elements of the business or personal qualities that stimulate clients to turn specifically to this enterprise and that generate profits for the firm in excess of what is required to generate a reasonable return on all other assets of the company, including income on intangible assets that can be identified and separately measured.

Business reputation is usually called a synonym for this word in Russian. this term was used by the compilers of PBU 14/2000. It is worth noting that there are differences in the definitions of IAS No. 22 and PBU 14/2000. According to IAS 22, goodwill is defined as the difference between the purchase price and the market value of the firm's assets, and according to PBU 14/2000, goodwill is the difference between the purchase price and the carrying amount of these assets.

Business reputation in the structure of intangible benefits is highlighted in accordance with Art. 150 of the Civil Code of the Russian Federation. Goodwill arises when a company makes stable, high profits and exceeds the industry average. Goodwill as an economic value is assessed and accepted on the balance sheet only at the moment of the change of the owner of the enterprise.

Sometimes a business reputation is tied to the exclusive rights to own a trademark. This type of intangible asset will have a definite useful life and is depreciable.

For most tasks, the valuation of goodwill is to determine the totality of those elements of the business or personal qualities that motivate customers to turn to this particular enterprise and that bring the firm profit in excess of what is required to obtain a reasonable return on all other assets of the company, including income on intangible assets that can be identified and separately assessed.

In general, goodwill can be anything that helps a company to generate more profit per unit of assets than an average similar company. For example, it can be a competent leader, well-trained friendly staff, or a favorable territorial position.

Goodwill valuation is based on two main methods:

• excess profits - the price is calculated as the value of the brand, which helps the company to generate more profit compared to the situation if it was selling an unbranded product;
• balance sheet - the value is equal to the difference between the value of the business as a whole and the value of its assets, both tangible and identifiable intangible.

Assessment documents

The list of required documents is on this page

If you are interested in the assessment of goodwill or business reputation, please contact us using the contact information. Call us, we will help!