An open field of membership charter allows anyone to join a credit union.
This open charter was transferred to Pentagon FCU after the emergency merger of Progressive CU into Pentagon FCU.
In Note 14 (Subsequent Events), Pentagon FCU reported an increase of intangible assets of approximately $108 million associated with the emergency merger.
The increase in the value of intangible assets was derived from the contractual right of Pentagon FCU to use Progressive CU's open field of membership charter.
The goodwill of $108 million isn't necessarily attributable to the open field of membership.
ReplyDeleteGoodwill in a purchase transaction is the resulting entry when the fair value of liabilities exceeds the fair value of assets - goodwill is generally recorded in all Credit Union merger transactions.
The resulting Goodwill could be the result of the value of the acquired credit union's trade name, mortgage servicing rights, member relationships or the value of the acquired credit union's trade name.
In order to count the value of Progressive's open field of membership as an intangible asset, Pentagon would need to show the asset is separable or has a contractual or legal benefit.
Before I assumed that to be the case, I would investigate the other 4 options as being the most common reasons for acquired goodwill.