The client has acquired 100% share capital of two companies as a bargain purchase and has ended up with a negative goodwill. I understand negative goodwill up to the fair value of non-monetary assets is recognised in profit or loss as those assets are recovered. However these assets include investment properties that are not depreciated and are maintained at fair value. I wanted some clarity as to how this negative goodwill should be treated in practice due to presence of investment properties.
If the investment properties are worth £800k and fair value of other non-monetary depreciable assets is £200k, do we need to apportion total negative goodwill of £700k and only release £140k to P&L and the rest will remain on balance sheet?
Any help will be appreciated.