UK Existing Goodwill acquired in a business combination

[Xuanchen]

Entity A acquires Target. Target's net assets fair value is 300 LC and has a goodwill of 600LC (arising from a past acquisition). The consideration paid is 1,000LC. The net book value of Target is 900 LC (assume net assets fair value equal its book value 300LC + Goodwill of 600LC).

My understanding is that the new goodwill is 1000LC - 300LC = 700LC, the legacy goodwill is not taken into account in the calculation or in the book of the acquirer. Do you agree?

 

[DrStrangeLove]

Correct. The legacy goodwill on Target's books from its prior acquisitions is not part of what Entity A acquires.

 

[Xuanchen]

thanks!