Goodwill Calculation When Acquired Company has Negative Reserves

Hello all

If a holding company acquires a subsidary that has negative reserves due to cumulative losses, how is this investment accounted for within the holding company accounts?

e.g.

Investment £600k (paid from holding company)

Fair value reserves of Subsidary on date of acquisition - £(300k)

Would goodwill in this instance be £900k? (£600 + £300)

 

If so then what value would be on the Holding company's balance sheet in relation to the investment?

 

Many thanks

 

 

Comments
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Are you talking about

The Limey |

Hi thanks for your reply

CIMA_Accountant |

You're wrong. Goodwill is

The Limey |

So goodwill is not held on

CIMA_Accountant |