Notional goodwill

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    could u plz advise what is notional goodwill?
    and what are the double entries for notional goodwill?
    in what questions may it come in f7 exams?

    Avatar of Salman
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    Goodwill and Notional Goodwill are actually two different concepts. Notional goodwill is actually discussed in a different framework – I hope you are studying International variant of F7 or P2.
    Term of notional goodwill actually comes from UK GAAPs (GAAP stands for generally accepted accounting principles). In UK they have FRSs. DO NOT confuse
    FRSs with IFRSs both of them are two different frameworks. FRSs are the standards which are practiced in UK where as IFRSs are practiced internationally and will replace current IASs ultimately.
    FRSs – Financial Reporting Standards – applicable to UK only
    IFRSs – Internation Financial Reporting Standards – applicable internationally
    IASs – International Accounting Standards – applicable internationally, due to be replaced with IFRSs gradually.

    As UK is also shifting from FRSs to IASs so notional goodwill is soon to become history.
    At the moment if you got any question in which you have term “notional goodwill” is most probably a question from the 2002 exam or earlier. There will be a slight change in calculations because of notional goodwill as you will experience that they will first calculate full goodwill from the given percentage and then they will be calculating the parent’s and subsidiary’s goodwill.
    But if you are still confused how they worked out I will suggest that you should leave those questions and practice the rest.

    Avatar of MikeLittle
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    Thanks Salman
    I’m only familiar now with IFRS and IAS. Frs is some years in the past, for me

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    Thanks Salman ?
    am currently doing F7-international.
    therefore i conclude that notional goodwill will not come out in the exams for J10

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