Negative Goodwill
Barron's Accounting Dictionary:
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Negative Goodwill
Term used in a business combination.
Negative goodwill is accounted for under the purchase (accounting) method when the fair market value of the net assets of the acquired company exceeds the purchase price paid. The credit difference reduces certain assets acquired. If any remaining credit exists, it is accounted for as an extraordinary gain.
Negative goodwill is accounted for under the purchase (accounting) method when the fair market value of the net assets of the acquired company exceeds the purchase price paid. The credit difference reduces certain assets acquired. If any remaining credit exists, it is accounted for as an extraordinary gain.
| Negative Confirmation, Negative Assurance, Nationaldo Notcallregistry | |
| Negligence, Negotiated Price, Net Assets |
Investopedia Financial Dictionary:
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Negative Goodwill
A gain occurring when the price paid for an acquisition is less than the fair value of its net assets.
Investopedia Says:
Depending on the circumstances, this is listed as a separate line item and usually recognized as income. Negative goodwill can sometimes occur after a distressed sale. Because this type of sale almost always happens under unfavorable conditions, the seller generally receives a worse price. When the price received is less than the actual value of its net assets you have negative goodwill.
Related Links:
We go over how to determine whether a measure of this important but hard-to-price intangible asset is justified. Can You Count On Goodwill?
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Barron's Accounting Dictionary
Dictionary of Accounting Terms. Copyright © 2010 by Barron's Educational Series, Inc. All rights reserved.
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