Goodwill

[CBPian]

Guys... A small question.

Company A has spun off its Business A to a sister company B. In A's balance sheet, there is a goodwill component(asset) relating to acquisition of Business A. Business A was earlier acquired from company X.
What will be the treatment of this goodwill. Will it be transferred to company B as an asset and would there be cashflow implications (money to be paid by Company B to A)?


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[eShA]

can be done in any of the two ways both are possible..

regard,,,,
from the best
and top of all
eShA


Although this may seem a paradox, all exact science is dominated
by the idea of approximation.

[CBPian]

Please explain.. cant get you what two ways

[Azeem Shah Khan]

<blockquote id="quote"><font size="1" face="Verdana, Tahoma, Arial" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by CBPian</i>
<br />Guys... A small question.

Company A has spun off its Business A to a sister company B. In A's balance sheet, there is a goodwill component(asset) relating to acquisition of Business A. Business A was earlier acquired from company X.
What will be the treatment of this goodwill. Will it be transferred to company B as an asset and would there be cashflow implications (money to be paid by Company B to A)?


A quick answer, assuming that the goodwill was bought from company X (ie it isn't company A's inherent goodwill, although there are some exceptions), it will become part of the fair value of company A.

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<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">

"You don't get to choose how you're going to die. Or when. You can only decide how you're going to live. Now."

[CBPian]

Still cant get the answer... the goodwill sits in the balancesheet of company A (was previously amortised but frozen on account of IFRS requirement). what should we do with it... should we transfer this goodwill to company B or take it as a hit on income as there would be no such business supporting this goodwill after spun-off.

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[Azeem Shah Khan]

i would rather use the term "disposal" instead of "transfer" considering company B is a sister company (i.e. a non-group co) hence a separate legal entity. disposal of any or all the assets of company A must be included in its fair value irrespectively.

i hope the above would clearify a bit further or may be i m missing the point altogether.

might be able to help you out if you could let me know the whole scenerio.

kind regards

"You don't get to choose how you're going to die. Or when. You can only decide how you're going to live. Now."