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Ask the Tutor ACCA FR

negative goodwill

Hhonang15y ago
Hi Mr Mike,

Can u tell me how to do d adjustment for negative goodwill in conso question ?and can u give me a simple example ?Thanks for help
MikeLittleMikeLittleTutor15y ago#1
That's an easy one! Debit cost of acquisition account, credit Income Statement

Hope that helps

( Most unlikely that negative goodwill will come up )
Wwendytan15y ago#2
Dear Mr Mike,

sorry that i get confuse on your answer, how come negative goodwill will be credit into income statement? its become revenue, negative doesn't mean loss incurred of the acquisition?

Again, is the negative goodwill cant be carried forward and must be recognised into income statement immediately?

thanks for your further guidance.
MikeLittleMikeLittleTutor15y ago#3
No, negative goodwill arises because we have paid less than our share of the fair value of the assets acquired - hence, we've made a "profit" on acquisition
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