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Negative goodwill means bargain purchase. This is how it is handled:
First calculate goodwill. You’ll get it as negative.
Next, add it to the Parent company’s Retained Earnings calculation. (after checking for any misstatement of the Fair values of Assets and Liabilities)Note: Unlike positive goodwill, we do not show negative goodwill as an Asset in the Consolidated Statement of Financial Position.
I would also like to know from the tutor about when to credit negative goodwill to the Consolidated Income Statement.
Hi Shimmer and neuro
Negative goodwill NEVER was shown as an asset – it’s a credit amount and would have been / was shown as a negative in the asset section.
But that’s changed so the current position is that it shall be credited through Comprehensive Income at the first opportunity – ie in the first set of financial statements after the acquisition
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