Goodwill on consolidation

Hi Mike, Think you've just answered this below, someone else was stuck on it too! Thank you and yes it's posted to w2 as it affects the post acq profits! Thank you

Negative goodwill is derived as the balancing figure (the difference between total "worth" of the entity at the date of acquisition and the fair value of the subsidiary's net assets) If the net assets exceed the cost of acquisition + the value attributable to the nci, negative goodwill is the result And negative goodwill is credited to consolidated retained earnings at the first opportunity OK?

Totally understand this but my working 2 was wrong compared to the answer I've got the below: At acquisition At reporting date SC. 20000. 20000 RE. 18000. 24000 FV Adj. Pl (2000). (2000) G 12000. 12000 Inv. 1000. 900 Depr. 500 Depr. (1200) Gwill. (3000) 49000. 51200. Post acqui profit 2200 ans is 3200 Where am I going wrong?

Ahhhhh pennies dropped thank you I totally understand it! No need for net assets working because their is negative goodwill! Marvellous sorry for being daft lol thank you again

Just the "at reporting date" figures is surely enough! 6,000 difference in booked retained earnings 900 investment (?) increase 500 depreciation add back (1,200) additional depreciation (3,000) write-off of goodwill 3,200 post acquisition retained HOWEVER!!!! This 3,000 goodwill figure is NOT negative goodwill If it were negative goodwill, it would have been added to the 6,000 difference in retained earnings It would effectively be treated as an extra profit (though I mustn't use that word "profit" because it isn't a profit (but between you and me and no-one else, it's exactly like a profit!)) The difference between your $2,200 and the correct $3,200 is that $1,000 fair value adjustment to the investments(?) at acquisition date I believe that you've made two errors 1) that's not negative goodwill 2) you have included the $1,000 adjustment in your calculation of today's retained earnings OK?