Alpha purchased Beta for S25,000. Beta's net identifiable assets were valued at S20,000. Calculate the goodwill and explain how Alpha should amortize it.

Here are the calculations and explanations for the goodwill: *a) Calculate the goodwill paid by Alpha on the purchase of Beta's business. Step 1: Calculate the total identifiable assets of Beta. Total Assets = Equipment + Stock + Debtors + Bank Total Assets = S9,300 + S4,100 + S5,300 + S3,200 Total Assets = S21,900 Step 2: Identify the total liabilities of Beta. Total Liabilities = Creditors = S1,900 Step 3: Calculate the net identifiable assets of Beta. Net Identifiable Assets = Total Assets - Total Liabilities Net Identifiable Assets = S21,900 - S1,900 Net Identifiable Assets = S20,000 Step 4: Calculate the goodwill. Goodwill is the excess of the purchase price over the fair value of net identifiable assets acquired. Goodwill = Purchase Price - Net Identifiable Assets Goodwill = S25,000 - S20,000 Goodwill = S5,000 The goodwill paid by Alpha is S5,000. *b) How should Alpha amortize this goodwill? Under current accounting standards (such as IFRS and US GAAP), goodwill is not amortized. Instead, it is subject to an annual impairment test. If the carrying amount of the goodwill exceeds its recoverable amount (the higher of its fair value less costs to sell and its value in use), an impairment loss must be recognized, reducing the goodwill's value on the balance sheet.