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Hello Mike and hope you are fine.
My question is about negative goodwill.
Just a simple example! Suppose A acquires 80% of B. and the goodwill is ($1000).PARTIAL goodwill method (proportional basis):
We should add the whole negative goodwill to the retained earnings (which is completely obvious and sensible!). So we should add $1000 to the retained earnings.FULL GOODWILL method
But my question is about this approach! Why in this approach we are adding the whole $1000 to the retained earning again ??
I think it is more logical to add $800 to retained earnings and $200 to the NCI! Why the whole $1000 is added to retained earnings? NCI is entitled to their share for this bargain purchase too!!Thank you in advance
I believe that the thinking behind this is that the nci have done nothing to help in achieving this bargain purchase so why should they get any benefit from the parent’s negotiating skills?
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