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If we have got a negative goodwill and NCI valued at market Value NOT PROPOTIONATELY…in this case do we credit negative goodwil to NCI retained earning or we do not?
Hi
To be honest, I’m not 100% sure. However …..
….. if you think about the reason why negative goodwill has arisen, it’s normally because the parent has made a bargain puchase. That’s possibly because of good negotiating skills ( could be a number of other reasons! )
But, if it IS good negotiating skills ( or similar ), I cannot imagine that the nci will be credited with any “extra” value.
If nci is NOT valued on a proportionate basis, then their value must be on a fair / full value basis. And if their valuation is full and fair, then there’s surely no justification for changing that by crediting the nci with a share of the negative goodwill – their share of the negative goodwill must surely be reflected within their fair value amount ….
…. I think
🙂
Negative goodwill arises when the fair value of the consideration paid is less than the fair value of net assets acquired.
According to IFRS 3, negative goodwill is treated as a bargain purchase, and is taken to Profit and Loss immediately – there is no adjustment to NCI.
If you’re doing the UK paper like me, negative goodwill is treated as a negative asset, and released to Profit and Loss over its expected life – again, there is no adjustment to NCI.
Leo, it helps me ( and the others ) greatly when we can see instantly that there are no new additional comments which may need attention on the “Ask the tutor” forums.
May I please ask you NOT to post after me ( and probably the others too ) unless you have an additional matter which needs my attention?
Many thanks
Mike
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