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Goodwill gain journal entry

Muhammad Ahmed (Financial Acct Advisory Analys) (24 Points)

22 June 2022

When we do impairment, we book journal entry:

Loss of Goodwill Impairment A/c Dr.

To Goodwill A/c

But when we gain our market value. It means increase in Goodwill. What's the journal entry for Gain of Goodwill?

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7 Replies

Pramod Tamang (Accountant) (7 Points)
Replied 22 June 2022

As far as my understanding & knowledge, self generated goodwill is not reflected in books of accounts. goodwill booked only at the time of purchase of other company goodwill. I am not sure completely. you may refer AS:26 and AS:10 or any other related accounting standard.

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prasad Nilugal ( GST Practitioner & Accounts ) (14196 Points)
Replied 22 June 2022

Please refer AS 28 ( Impairment of an Asset). regarding Goodwill all details are given in this Accounting Standard .

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Yasaswi Gomes new (Finance ) (4487 Points)
Replied 30 June 2022

What kind of impairment are you calculating? Proportionate method or fairvalue method. Only one is allowed as per the company policy. I am sure there must be something like proportionate method or fairvalue in AS.

Yasaswi Gomes new (Finance ) (4487 Points)
Replied 30 June 2022

AS 28.78 suggests allocation of goodwill. That must be prorated when an impairment occurs or the Deferred taxes standard deals with goodwill without deferred tax impact. This bottom and bottoms down will be taken off and all AS will be redundant. I read the problem of bottoms down once from a professional CA blogger and it looks funny to me cause Indas has nothing like it and we all must soon adopt it instead of doing double work.

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Yasaswi Gomes new (Finance ) (4487 Points)
Replied 30 June 2022

Allright! Impairment losses are allocated.

During consolidation, Deferred taxes arising are ignored, or is it subsequent treatment? (IFRS missed to address this part and just said 'the difference goes to goodwill'. I can answer everything when someone is well educated.

Coming to impairment prorate, its all crap because no where in the IFRS standard mentions if, Goodwill impairment is prorated or the whole CGU's Impairment. Im a s*xy avid reader lol, I will find out everything by tomorrow because I have to sleep now.

1 Like