- May 17, 2021 at 2:29 pm #620836
My understanding of goodwill when a parent acquires a subsidiary is as follows:
In the single entity the cost of acquisition will be shown as investment. Upon consolidation, this investment will be removed and replaced with the assets
and liabilities of the subsidiary, with the difference being recognized as goodwill.
My confusion comes from the fact that in some single entity accounts (where the parent has a sub) I have seen goodwill being recognize. As above,
I was under the impression that goodwill was a consolidation adjustment. Is there scope to recognize subsidiary goodwill in single entity accounts
if you are not producing consolidated accounts? And/or is it a case of them directly buying the goodwill of a company.
my point is , can we recognized goodwill separately in parent account or subsidiary account or both?May 17, 2021 at 8:06 pm #620884
This goodwill figure in the subsidiary accounts will be the excess amounts that they have paid to acquire a sole trader business or similar.
ThanksMay 18, 2021 at 6:22 am #620906
so you are saying if the subsidiary in the past bought some sole trader business and then later on in the future being bought by the parent and they have some goodwill value in the books
,so now we can recognized goodwill in the subsidiary ?
is this the only way to recognized goodwill separately ?
let say we as a parent acquire a co and paid extra 100$ , now can we just recognized this 100$ as a goodwill in the subsidiary books because we as parent purchase it ( not internally generated ) ?May 19, 2021 at 10:10 pm #621129
Yes, that is what I’m saying but it would not be consolidated and would be written off in the group accounts.May 20, 2021 at 6:19 am #621152
Ok i get the sole trader goodwill concept , let say if we just acquire a CO without any goodwill in the past in its books and we as a parent will recognized goodwill in group account based on fair value of its net asset(subsidiary) , my point is can we recognized this goodwill separately in subsidiary books which parent paid for ???May 21, 2021 at 7:56 pm #621365
??May 22, 2021 at 9:43 am #621416
What is with the ?? This is a free service and therefore there is not going to be an instantaneous reply to your query. I check the forum on a Wednesday and at the weekends. As it gets closer to the exams then I will check it more regularly. Also, a simple thanks goes a long way for the initial replies that I’ve already taken the time given to you.
To answer your question, then no, you cannot do this and why would you do this? Where have we ever done this? It is an asset of the group and so recognised in the group accounts.
ThanksMay 22, 2021 at 2:25 pm #621448
first of all , really sorry for the question marks …..now that i know the mechanism of your replies i would not post a reminder message…..
and thank you very much for your precious time it means a lot to me.
and from your answer to the query , goodwill will only be recognized in the group accounts.
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