Negative Goodwill

Anyone remember the accounting entry for Negative goodwill?

No such thing.

If a company were to pay less than the FV of the net assets of the company that they were acquiring, they would just book a gain. As Joey said, there is no such thing as negative goodwill.

may be he asked how to account impairment of goodwill?

JoeyDVivre Wrote: ------------------------------------------------------- > No such thing. Wrong, have a look: http://www.investopedia.com/terms/n/negativegoodwill.asp

willispierre Wrote: ------------------------------------------------------- > If a company were to pay less than the FV of the > net assets of the company that they were > acquiring, they would just book a gain. As Joey > said, there is no such thing as negative goodwill. there is actually, I took an accounting class and it exists, but it will not be on level 1 so let’s not cry about it

strange, if you look at the definition given there it merely states that you book a gain. This is not classified as goodwill. Not sure why they characterize it that way.

willispierre Wrote: ------------------------------------------------------- > strange, if you look at the definition given there > it merely states that you book a gain. This is > not classified as goodwill. Not sure why they > characterize it that way. Ok, but you must report it on the BS and income statement. Hint: On the asset side you cannot report negative value.

Actually, maybe there is now - From FASB 141R which was released in 12/2007 A Bargain Purchase This Statement defines a bargain purchase as a business combination in which the total acquisition-date fair value of the identifiable net assets acquired exceeds the fair value of the consideration transferred plus any noncontrolling interest in the acquiree, and it requires the acquirer to recognize that excess in earnings as a gain attributable to the acquirer. In contrast, Statement 141 required the “negative goodwill” amount to be allocated as a pro rata reduction of the amounts that otherwise would have been assigned to particular assets acquired. This Statement therefore improves the representational faithfulness and completeness of the information provided about both the acquirer’s earnings during the period in which it makes a bargain purchase and the measures of the assets acquired in the bargain purchase. News to me… Edit: Are you being tested on 141R or 141?

JoeyDVivre Wrote: ------------------------------------------------------- > Actually, maybe there is now - From FASB 141R > which was released in 12/2007 > > A Bargain Purchase > > This Statement defines a bargain purchase as a > business combination in which the total > acquisition-date fair value of the identifiable > net assets acquired exceeds the fair value of the > consideration transferred plus any noncontrolling > interest in the acquiree, and it requires the > acquirer to recognize that excess in earnings as a > gain attributable to the acquirer. In contrast, > Statement 141 required the “negative goodwill” > amount to be allocated as a pro rata reduction of > the amounts that otherwise would have been > assigned to particular assets acquired. This > Statement therefore improves the representational > faithfulness and completeness of the information > provided about both the acquirer’s earnings during > the period in which it makes a bargain purchase > and the measures of the assets acquired in the > bargain purchase. > > > News to me… > > Edit: Are you being tested on 141R or 141? Exactly, for example when you buy a company which is going burst :slight_smile:

strangedays Wrote: ------------------------------------------------------- > JoeyDVivre Wrote: > -------------------------------------------------- > ----- > > Actually, maybe there is now - From FASB 141R > > which was released in 12/2007 > > > > A Bargain Purchase > > > > told you : ) my acctg prof is a big weight in the field and had a h*** on for 141R, so it does exist. if this crap is on the CFA im gonna laugh.

strangedays Wrote: ------------------------------------------------------- > JoeyDVivre Wrote: > -------------------------------------------------- > ----- > > Actually, maybe there is now - From FASB 141R > > which was released in 12/2007 > > > > A Bargain Purchase > > > > This Statement defines a bargain purchase as a > > business combination in which the total > > acquisition-date fair value of the identifiable > > net assets acquired exceeds the fair value of > the > > consideration transferred plus any > noncontrolling > > interest in the acquiree, and it requires the > > acquirer to recognize that excess in earnings as > a > > gain attributable to the acquirer. In contrast, > > Statement 141 required the “negative goodwill” > > amount to be allocated as a pro rata reduction > of > > the amounts that otherwise would have been > > assigned to particular assets acquired. This > > Statement therefore improves the > representational > > faithfulness and completeness of the > information > > provided about both the acquirer’s earnings > during > > the period in which it makes a bargain purchase > > and the measures of the assets acquired in the > > bargain purchase. > > > > > > News to me… > > > > Edit: Are you being tested on 141R or 141? > > lol! Nope, but you know…curiosity is the best skill a research may have :slight_smile: