• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

June 2025 ACCA Exams

How was your exam? Comments & Instant poll >>

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for September 2025 exams.
Get your discount code >>

Treatment of negative goodwill-anyone can explain to me?

Forums › ACCA Forums › General ACCA Forums › Treatment of negative goodwill-anyone can explain to me?

  • This topic has 6 replies, 3 voices, and was last updated 11 years ago by Ngu.
Viewing 7 posts - 1 through 7 (of 7 total)
  • Author
    Posts
  • March 23, 2014 at 6:06 am #162841
    Unusualskill
    Member
    • Topics: 4
    • Replies: 4
    • ☆

    Negative goodwill

    Negative goodwill arises when the fair value of acquired assets exceeds the consideration given. Such a situation can arise, for example, when a company which is making heavy losses is taken over.

    If an acquisition appears to give rise to negative goodwill, the fair values of the acquired assets should be tested for impairment and the fair values of the acquired liabilities checked carefully to ensure that none has been omitted or understated. Negative goodwill remaining after the fair values of the assets and liabilities have been checked should be recognised and separately disclosed on the face of the balance sheet, immediately below the goodwill heading and followed by a subtotal showing the net amount of the positive and negative goodwill.

    Negative goodwill up to the fair values of the non-monetary assets acquired should be recognised in the profit and loss account in the periods in which the non-monetary assets are recovered, whether through depreciation or sale.

    Any negative goodwill in excess of the fair values of the non-monetary assets acquired should be recognised in the profit and loss account in the periods expected to be benefited.

    I would like to know when it is treated under assets in balance sheet and when is it written off against reserves in equity?

    March 23, 2014 at 4:13 pm #162861
    Unusualskill
    Member
    • Topics: 4
    • Replies: 4
    • ☆

    any1 have the knowledge pls help thanks

    March 23, 2014 at 6:01 pm #162863
    Ngu
    Participant
    • Topics: 9
    • Replies: 34
    • ☆

    ITO IFRS 3 . 34- 35 a gain from burgain purchase should be recognised in the SOP&L in full, likewise goodwill armotisation has been disallowed. This means that it becomes part of the distributable reserves in the SOFP. ITO IFRS1 there is no such thing as negative goodwill to be presented on the face of the SOFP. I am not sure what other jurisdictions prescribe but if you writting the INT version then the above is the required treatment. I hope that helps

    March 24, 2014 at 1:46 pm #162931
    Unusualskill
    Member
    • Topics: 4
    • Replies: 4
    • ☆

    Can i confirm with u? Is the negative goodwill added to capital reserve or revenue reserve?

    March 25, 2014 at 3:44 am #162962
    Ngu
    Participant
    • Topics: 9
    • Replies: 34
    • ☆

    distributable reserves is onother name for revenue reserves. Goodluck

    March 25, 2014 at 5:21 am #162965
    chaybooyee
    Member
    • Topics: 5
    • Replies: 7
    • ☆

    Treatment of negative goodwill
    1. first check the calculation
    2 credited to profit or loss, so it will reduce reserves balance..

    March 25, 2014 at 1:00 pm #163010
    Ngu
    Participant
    • Topics: 9
    • Replies: 34
    • ☆

    @ chaybooyee. it will not reduce reserve balances but will increase them. take it as gaining something / an asset “for free”.

  • Author
    Posts
Viewing 7 posts - 1 through 7 (of 7 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • John Moffat on The financial management environment – ACCA Financial Management (FM)
  • Lekhanaa on IASB Conceptual Framework – Introduction – ACCA Financial Reporting (FR)
  • wZaidhan on Sources of Finance – Islamic Finance – ACCA Financial Management (FM)
  • manahylilyas on The financial management environment – ACCA Financial Management (FM)
  • poojam on Objective of financial reporting – ACCA Financial Reporting (FR)

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in