Negative Goodwill

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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"We expect this growth to continue into financial 2020 and forecast 50% Ebit growth (28% excluding profit from negative goodwill recognised as part of a contract win) with margins remaining around 6%."
Hellenic Bank, taking the mantle of leading retail and SME bank in Cyprus, whilst de-risking its balance sheet and business model, posted record post-tax profits of EUR 320 mln for 2018, driven mainly by the 'negative goodwill' of EUR 297.9 mln tied to the Co-op deal.
Hellenic Bank said Thursday it had recorded a net profit of e1/4320m in 2018 mainly on the positive impact of the negative goodwill of e1/4297,9m stemming from the acquisition of the co-op bank.
The negative goodwill compared to the proposed Annual Revenue Allowed was 49%.
When the fair value of identifiable net assets received exceeds fair value of consideration transferred, negative goodwill (or bargain purchase gains) is created.
69, Government Combinations and Disposals of Government Operations, should be reclassified as a deferred outflow of resources (positive goodwill) or treated as a reduction to net position (negative goodwill);
In addition, in its Q1 2015 interim report, Concentric has recognised SEK15m of income arising from negative goodwill as the fair value of the net assets acquired with GKN Pumps that exceeded the purchase price.
As noted in in the group's 1Q15 interim report, Concentric has recognised SEK 15m of income arising from negative goodwill as the fair value of the net assets acquired with GKN Pumps exceeded the purchase price.
Also, operating income for Q1 was SEK117m, as compared with SEK77m in Q1 of 2014, including negative goodwill of SEK15m recognised on acquisition of GKN Pumps.
During the period, the firm acquired subsidiary eV Products and there was negative goodwill on the deal of PS2.4m.
However, earnings before interest, taxes, depreciation and amortisation (EBITDA) were knocked from a loss of PS773,000 for the year ended April 2013 to a loss of PS2.48m by negative goodwill on the acquisition of eV Products of PS2.4m.
For example, if a bargain purchase were to occur and the purchase method were used, the net asset's fair value would need to be reduced pro rata in order to avoid the recognition of "negative goodwill" (Smith, 2008).