Negative goodwill arises when one company purchases the net assets of another company for an amount less than their fair market value, and is recorded as a gain on the statement of income/comprehensive income.

Question

Quizplus · Accepted Answer

Negative goodwill occurs when the purchasing company buys the assets of another company for less than their fair market value. The difference between the purchase price and the fair market value is recorded as a gain on the statement of income/comprehensive income.

Negative Goodwill Arises When One Company Purchases the Net Assets