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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Purchase price
Hi,
Purchase price is it consideration transferred in goodwill/asking price in acquisition context?
Also, suppose in acquisition context, the purchase is $50m, and goodwill is $30.
So for interpretation, part of the $50m is $30 is goodwill and the balance will be called what?
+ve goodwill is a cost and -ve goodwill is a revenue right?
Interpretation:
-ve g/w is when company paid less than what the SNA or target company worth for right?
Thanks
Hi,
Yes, the purchase price is what will have been paid for the subsidiary.
The difference between the amount paid and the goodwill calculated will be the net assets acquired and NCI on acquisition.
Positive goodwill is an intangible non-current asset, negative goodwill is a bargain purchase recgonised through profit or loss in the year of acquisition, and as you correctly state arises because we have paid less for the subsidiary than what its net assets are worth.
Thanks
Thanks!