negative goodwill

Consolidation (EC-CS)

A credit-side differential that can occur during the consolidation of investments.

Negative goodwill appears as a seperate item on the liabilities side of the balance sheet when performing statutory consolidations.

It occurs when the acquisition cost of an investment in a consolidation unit is less than the share of the fair market value (or book value) of the net assets of the consolidation unit acquired.

Possible causes of negative goodwill are either

Consolidation (FI-LC)

A credit-side differential that can occur during the consolidation of investments.

Negative goodwill appears in the stockholders' equity section of the balance sheet.

This occurs when the purchase price of a company acquired is less than the sum of the fair market value (or book value) of the net assets acquired.

Possible causes of negative goodwill are either a lower purchase price due to the poor prospects of the company to be acquired or an annual net income that occurred between the time of acquiring the shares and the first consolidation, but which was not distributed to the shareholders.