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Hi tutor could you please tell me how negative goodwill is treated in group accounts? While solving the questions I have always seen it being added it to the retained earnings amount but according to one of the mcqs from sept 2016, it should be credited to P&L
Kindly tel me which one of these to follow.
ThanksWhat’s the difference between “added it to the retained earnings” and “credited to P&L”
Retained earnings is the figure for the accumulated un-distributed profits made since the company was created
P&L (now profit or loss) is just this year’s results which, after a dividend is paid, will then add on to the retained earnings brought forward
If it’s a question for statement of financial position, negative goodwill will be added to retained earnings in working W3
If it’s a question for statement of profit or loss, negative goodwill will be added in as an income to improve the year’s results
OK?
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