how identifiable assets are used
for example suppose a conglomerate company purchases both a smaller manufacturing firm and a smaller start up internet marketing company the manufacturing company would likely have most of its value tied up in property equipment inventory and other physical assets so virtually all of its assets would be identifiable the internet marketing company on the other hand would likely have very few identifiable assets and its value as a company would be based on its future earnings potential as such the purchase of the marketing company would generate a lot more goodwill on the company s books as it s total value cannot be readily measured even though there might be a few tangible assets example of identifiable assets vs goodwillif the fair value of company abc s identifiable assets are 22 million and its liabilities are 10 million it has an identifiable value company xyz agrees to purchase company abc for 15 billion the premium value following the acquisition is 3 billion this 3 billion will be included on the acquirer s balance sheet as goodwill since it exceeds the identifiable assets as a real life example consider the t mobile and sprint merger announced in early 2018 1 the deal was valued at 35 85 billion as of march 31 2018 per an s 4 filing the fair value of the assets was 78 34 billion and the fair value of the liabilities was 45 56 billion 2 the difference between the assets and liabilities is 32 78 billion thus goodwill for the deal would be recognized as 3 07 billion 35 85 32 78 the amount over the difference between the fair value of the identifiable assets and liabilities 