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Residual method

   Also found in: Encyclopedia 0.01 sec.
Residual method
A method of allocating the purchase price for the acquisition of another firm among the acquired assets.


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The taxpayer was a newspaper publisher that began depreciating the basis it had allocated (under an allocation method similar to the residual method required by Secs.
On the face of it, residual methods are much more efficient, but results take longer to come to fruition.
Per SFAS 141, goodwill is determined through a residual method as the difference between the fair values of all other acquired assets and liabilities and the business equity value.
 
 
 
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