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negative goodwill on consolidation


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The goodwill consolidation in which the price paid for an acquisition is less than the fair value of its net tangible assets. According to Financial Reporting Standard 10, negative goodwill should be recognized and separately disclosed on the balance sheet, immediately below the goodwill heading. It should be recognized in the profit and loss account in the periods in which the non-monetary assets acquired are depreciated or sold. Any negative goodwill in excess of the values of the non-monetary assets should be written back in the profit and loss account over the period expected to benefit from the negative goodwill. The relevant International Financial Reporting Standard is IFRS 3, Business Combinations.

Subjects: Accounting.


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