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Why do we add negative good will to retained earnings and increase our profit???
We should be treating it as loss and charge it against profit???
Please somebody tell me the logic- Topics: 0
- Replies: 1
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Hi!
On my opinion, a negative goodwill means that the acquirer paid less than it worth on the subsidiary – a bargain. Therefore for the parent-and consequently for the group- a negative goodwill is a gain, not in the true meaning of the term but in the fact that the expenditure was smaller. You have more information here : https://pakaccountants.com/what-is-negative-goodwill-and-its-accounting-treatment/ and also you can see more on negative goodwill on the actual IFRS 3 : https://ec.europa.eu/internal_market/accounting/docs/consolidated/ifrs3_en.pdf.
Hope this helps! 🙂
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