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Negative Goodwill

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Negative Goodwill
Income, perhaps even a profit, that comes from the sale of an asset at less than its fair market value. Negative goodwill is most common during a distressed sale, in which one must raise cash immediately to pay some liability. The buyer records the difference between the negative goodwill and the fair market value as a gain on the balance sheet.


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Highlights: - Turnover up 9% to [pounds sterling]963,000 (six months to 30 September 2007: [pounds sterling]886,000) - Operating profit of [pounds sterling]967,000 (six months to 30 September 2007: [pounds sterling]341,000) which includes negative goodwill of [pounds sterling]1,686,000 arising from the Tiha Uvala acquisition.
141 requires negative goodwill to be allocated as a pro rata reduction to the net assets (intangible assets first, then certain tangible assets).
The deal would also lift Barclays' capital ratio, even before the bank completes a planned capital injection alongside the deal, because of a negative goodwill adjustment from the deal amounting to about pounds 1.
 
 
 
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