[Oimie]

Scenario 1:

Company A acquires Company B for 1,000.

Company B’s BV is 500 with a FMV of 1,200.

We do not recognize goodwill of 500? It is considered gain of 200?

Scenario 2:

Company A acquires Company B for 1,000.

Company B’s BV is 500 with a FMV of 900.

We recognize a goodwill of 500?

I had thought all along that as long as purchase price is > BV, it is considered goodwill.

FAR 85 June 2015
AUD 80 Nov 2015
REG 83 Nov 2015
BEC 79 Feb 2016

[johnny_debt]

@Oimie,

Scenario 1 is no goodwill since purchase price < FV of assets. Therefore its a bargain purchase and gain to be recognize.

Scenario 2 is 100 of goodwill since purchase price > FV of assets.

AUD - 91
BEC - 84
FAR - 91
REG - 91

[Oimie]

@johnny_debt: Thank you for the clarification. I had thought all along that goodwill was the difference between cash paid and BV.

FAR 85 June 2015
AUD 80 Nov 2015
REG 83 Nov 2015
BEC 79 Feb 2016

[Author]

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