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negative goodwill

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › negative goodwill

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  • April 26, 2017 at 5:31 pm #384024
    chandan
    Member
    • Topics: 6
    • Replies: 9
    • ☆

    Hi sir, in regards to chapter 7 example 10. Negative goodwill is calculate. yet we add it to retained earnings.

    Is it that we saved that money when buying the subsidiary since its fair value of net asset’s was higher than our investment and nci fair value? That means its purely just a book figure?

    Please tell me whether I am right or wrong?

    April 26, 2017 at 6:47 pm #384044
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23254
    • ☆☆☆☆☆

    If you acquire assets that are valued at, say, $20 and you pay just $17 to acquire those assets, does that not mean that you have converted an asset of $17 into an asset worth $20

    And that’s a profit?

    So add it to retained earnings!

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