assignment of goodwill plc

Assignment of Goodwill (Jurisdiction Neutral) | Practical Law

Assignment of Goodwill (Jurisdiction Neutral)

Practical law uk standard document w-016-2422  (approx. 10 pages).

Assignment of Goodwill (Jurisdiction Neutral)

• Unlimited access to our online legal know-how services during the trial period.
• Training and support.
• International

• Knowledge Center

Assignment of Goodwill (Deed): A Comprehensive Guide

• Ayodeji Akingbade
• February 25, 2024
• Land , Law and Regulations

Table of Contents

When it comes to business transactions, the assignment of goodwill is a critical aspect that should not be overlooked. Goodwill refers to the intangible value associated with a business, such as its reputation, customer relationships, and brand recognition. Assigning goodwill through a deed allows for the transfer of these intangible assets from one party to another. In this comprehensive guide, we will delve into the concept of assigning goodwill, the process involved, its legal implications, and the importance of conducting due diligence before entering into such agreements.

Understanding Goodwill and its Importance

Goodwill is a vital component of any business, representing the intangible assets that contribute to its overall value. It encompasses factors such as customer loyalty, brand reputation, intellectual property, and favorable supplier relationships. Goodwill plays a significant role in attracting customers, generating revenue, and maintaining a competitive advantage in the market.

Assignment of Goodwill: An Overview

The assignment of goodwill involves transferring the ownership rights of intangible assets from one entity to another. This transfer is typically carried out through a legal document known as a deed. The deed outlines the terms and conditions of the transfer, including the consideration exchanged, rights and obligations of the parties involved, and any restrictions or limitations on the use of the transferred goodwill.

Components of the Assignment Deed

An assignment deed for goodwill typically includes the following components:

1. Parties : The deed identifies the parties involved in the assignment, namely the assignor (the party transferring the goodwill) and the assignee (the party receiving the goodwill).

2. Consideration : The assignment deed specifies the consideration exchanged between the parties. This can be in the form of monetary payment, non-monetary assets, or a combination of both.

3. Rights and Obligations : The deed clearly outlines the rights and obligations of both the assignor and the assignee. It may include provisions related to the use of the transferred goodwill, non-compete clauses, and any ongoing obligations of the assignor.

4. Restrictions and Limitations : The assignment deed may include restrictions and limitations on the use of the transferred goodwill. This can include geographical restrictions, limitations on the type of business activities the assignee can undertake, or any other specific conditions agreed upon by the parties.

5. Termination : The deed may also include provisions for termination, specifying the circumstances under which the assignment can be terminated and the consequences of termination.

Legal Implications and Considerations

Assigning goodwill through a deed has legal implications that should be carefully considered. Here are some key legal aspects to keep in mind:

Contractual Obligations

The assignment of goodwill is a contractual agreement between the assignor and the assignee. Both parties are legally bound by the terms and conditions outlined in the assignment deed. Therefore, it is crucial to ensure that the deed is drafted accurately and comprehensively to avoid any misunderstandings or disputes in the future.

Intellectual Property Rights

Goodwill often includes intellectual property rights, such as trademarks, copyrights, or patents. When assigning goodwill, it is essential to verify that the assignor has the legal right to transfer these intellectual property rights. Conducting a thorough intellectual property search and clearance process can help identify any potential conflicts or infringement issues.

Due Diligence

Before entering into an assignment of goodwill, it is crucial to conduct due diligence on the business and its intangible assets. This may involve reviewing financial records, customer contracts, licenses, and any legal agreements related to the business. Due diligence helps verify the value of the goodwill being transferred and mitigates the risk of undisclosed liabilities or legal issues.

Compliance with Laws and Regulations

Assigning goodwill may be subject to certain laws and regulations, depending on the jurisdiction and nature of the business. It is important to ensure compliance with applicable laws, such as antitrust regulations, consumer protection laws, and intellectual property laws. Seeking legal counsel can help navigate these complexities and ensure a smooth and legally compliant assignment process.

Importance of Due Diligence in Assigning Goodwill

Conducting due diligence is of utmost importance when assigning goodwill. It helps identify any potential risks or issues that could impact the value of the transferred assets. Some key reasons to conduct due diligence include:

1. Assessing Value : Due diligence allows for a thorough evaluation of the value of the goodwill being transferred. This helps both parties understand the potential benefits and risks associated with the assignment.

2. Identifying Liabilities : Through due diligence, any undisclosed liabilities or legal issues can be identified. This prevents the assignee from inheriting any unforeseen problems that could impact the business’s reputation or financial stability.

3. Mitigating Risks : Due diligence helps mitigate risks by ensuring that the assignor has the legal right to transfer the goodwill and that all necessary permissions and licenses are in place. It also helps identify any potential conflicts or infringements on intellectual property rights.

4. Negotiating Terms : The insights gained through due diligence can be used to negotiate the terms and conditions of the assignment. Thiscan include adjustments to the consideration exchanged, additional warranties or indemnities, or specific provisions to address any identified risks or concerns.

5. Building Trust : By conducting thorough due diligence, both parties demonstrate their commitment to transparency and integrity. This helps build trust and confidence in the assignment process, fostering a positive working relationship between the assignor and the assignee.

The assignment of goodwill through a deed is a significant step in transferring intangible assets from one party to another. It involves careful consideration of legal implications, conducting due diligence, and ensuring compliance with applicable laws and regulations. By understanding the concept of goodwill, the components of an assignment deed, and the importance of due diligence, businesses can navigate the assignment process successfully and protect their interests. It is always advisable to seek legal counsel to ensure a smooth and legally compliant assignment of goodwill.

Ayodeji Akingbade is a Content writer /Copywriter with an insatiable thirst for knowledge. He loves researching topics such as real estate investing, technology trends, and personal finance before writing about them. He’s a realtor and real estate investor who connects with readers through real life experiences to bring fresh perspectives and novel ideas in all of his work. As he strives to keep his content up-to-date, he always looks for new ways to stay ahead and learn something new every day. He enjoys football and the traditional game of Monopoly with friends and family when he is not writing or reading.

Get Expert Advice on Lagos Property Market

Are you an home-buyer, new or experienced investor get your tailored success strategy with a free consulation book now and unlock your potential.

4-bedroom, Testing Project

Coastal Town, Ibeju Lekki

The Advantage Estate

Ownland scheme III (The Cottage)

You may also like:, essential tips for successful property development, introduction to property management: navigating the basics, residential property tax in nigeria: all you need to know, how to market real estate in nigeria, let’s stay in touch, get all of our latest real estate tips delivered straight to your inbox..

GET IN TOUCH

• 18a, Bintu street, off Ajayi road, okeira, Ogba, Lagos
• [email protected]
• +2349135617185
• Communities

LET'S STAY IN TOUCH

Assignment of goodwill

How it relates to the law in british columbia canada.

In British Columbia, Canada, the assignment of goodwill is governed by the Business Corporations Act. According to the Act, the assignment of goodwill can only be done with the consent of all shareholders of the corporation. The assignment must also be in writing and must be registered with the Corporate Registry. Failure to comply with these requirements can result in legal consequences. Additionally, the assignment of goodwill may also have tax implications, and it is important to consult with a legal or tax professional before proceeding with the assignment.

Impact on Business Owners in British Columbia

The assignment of goodwill is a crucial aspect of any business acquisition in British Columbia, Canada. Small businesses in the province need to be aware of the legal requirements and tax implications of transferring their intangible assets, such as reputation and customer base, to another party. Failure to comply with the Business Corporations Act can result in legal consequences, making it important for small businesses to consult with legal or tax professionals before proceeding with the assignment.

Potential Legal Risks, Legal Challenges, or Legal Pitfalls for Businesses in British Columbia

As a small business owner in British Columbia, it is important to be aware of the potential legal risks and challenges related to the assignment of goodwill. Goodwill refers to the intangible value of a business, such as its reputation, customer base, and brand recognition. Assigning goodwill involves transferring this value from one party to another, typically in the context of a business sale or transfer. One potential legal risk is the possibility of a dispute over the value of the goodwill being assigned. If the parties involved in the assignment cannot agree on the value of the goodwill, it may be necessary to involve a third-party appraiser or mediator to resolve the issue. This can be time-consuming and costly, and may delay the completion of the assignment. Another potential legal challenge is the risk of infringing on the intellectual property rights of others. If the goodwill being assigned includes trademarks, logos, or other intellectual property, it is important to ensure that these rights are properly licensed or assigned. Failing to do so could result in legal action being taken against the business, which could be costly and damaging to its reputation. To avoid or mitigate these issues, small business owners should take the following steps: 1. Seek legal advice: Before assigning any goodwill, it is important to consult with a lawyer who specializes in business law. They can help ensure that all legal requirements are met and that the assignment is structured in a way that minimizes risk. 2. Conduct due diligence: Before assigning any goodwill, it is important to conduct a thorough review of the business's assets and liabilities. This can help identify any potential legal issues that need to be addressed before the assignment can be completed. 3. Obtain proper licenses and assignments: If the goodwill being assigned includes intellectual property, it is important to ensure that all necessary licenses and assignments are in place. This can help avoid legal disputes and ensure that the business's intellectual property rights are protected. By taking these steps, small business owners in British Columbia can help avoid potential legal risks and challenges related to the assignment of goodwill.

BC Business Practices and Consumer Protection Act (BPCPA)

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system → .

Trending News

Related Practices & Jurisdictions

• Intellectual Property
• Litigation / Trial Practice
• Federal Circuit / U.S. Court of Spec. Jurisdiction

After a trademark achieves federal registration, ownership of the mark may change hands for a variety of reasons. When a trademark owner transfers their ownership in a particular mark to someone else, it is called an assignment. Generally, for an assignment of a trademark to be valid , the assignment must also include the ‘goodwill’ associated with the mark (goodwill is an intangible asset that refers to the reputation and recognition of the mark among consumers). If the assignment of a trademark includes the mark’s goodwill and is otherwise legal, the assignee gains whatever rights the assignor had in the mark. Importantly, this includes the mark’s priority date, which has implications for protecting the mark from potential infringers going forward.

In contrast, if an assignment of a trademark is made without the mark’s accompanying goodwill, then it is considered an assignment “in gross” — and the assignment is invalid under U.S. law. Courts have analyzed whether an assignment was made in gross in a few different ways, but, as is the case with much of trademark law, protecting customers from deception and confusion is the primary motivation behind any analysis for determining the validity of an assignment.

One way courts determine if an assignment was made in gross is through the substantial similarity test. This test essentially examines whether the assignee is making a product or providing a service that is “substantially similar” to that of the assignor, such that consumers would not be deceived by the assignee’s use of the mark. This analysis includes an assessment of the quality and nature of the goods and services provided under the mark post-assignment.  Thus, even if an assignee is using the mark on the same type of goods, but the goods are of lower quality than the goods previously offered by the assignor under the mark, the assignment could be invalid. However, slight or inconsequential changes to goods and services after an assignment are not likely to invalidate the assignment, as such changes are to be expected and would not thwart consumer expectations.

Decisions on the question of substantial similarity are only marginally instructive, as the  test calls for a fact specific inquiry into what the consuming public has come to expect from the goods or services offered under a given mark. For example, courts have noted that despite similarities in services and goods, “even minor differences can be enough to threaten customer deception.” [1] Instances of products or services that were deemed not substantially similar (and thus resulted in invalid assignments) include: an assignee offering phosphate baking powder instead of alum baking powder; [2] an assignee using the mark on a pepper type beverage instead of a cola type beverage; [3] an assignee producing men’s boots as opposed to women’s boots; [4] an assignee using the mark on beer instead of whiskey; [5] and an assignee selling hi-fidelity consoles instead of audio reproduction equipment. [6]

Conversely, case law has also shown that substantial similarity can be found even when products or services do differ in some aspects, if consumers aren’t likely to be confused. For example, the following product changes did not result in a finding of an invalid assignment: an assignee offering dry cleaning detergent made with a different formula; [7] an assignee using thinner cigarette paper; [8] and an assignee selling a different breed of baby chicks. [9]

Whether goods or services are substantially similar may seem like an easy test to apply, but, as case law demonstrates, this fact-intensive analysis can yield results that look strange in the abstract. Disputes involving the validity of a trademark assignment are decided on a case-by-case basis, using the specific facts at hand to determine if consumer expectations are being met under the new use. Thus, while trademarks acquired through assignment can have significant value (and grant the assignee important rights formerly held by the assignor), assignees should be wary of changes to goods or services under an acquired mark that could be seen as deceiving the public.

[1] Clark & Freeman Corp. v. Heartland Co. Ltd. , 811 F. Supp. 137 (S.D.N.Y. 1993).

[2] Independent Baking Powder Co. v. Boorman , 175 F. 448 (C.C.D.N.J.1910).

[3] Pepsico, Inc. v. Grapette Company , 416 F.2d 285 (8th Cir. 1969).

[4] Clark & Freeman Corp. v. Heartland Co. Ltd. , 811 F. Supp. 137 (S.D.N.Y. 1993).

[5] Atlas Beverage Co. v. Minneapolis Brewing Co. , 113 F.2d 672 (8 Cir. 1940).

[6] H. H. Scott, Inc. v. Annapolis Electroacoustic Corp. , 195 F.Supp. 208 (D.Md.1961).

[7] Glamorene Products Corp. v. Procter & Gamble Co. , 538 F.2d 894 (C.C.P.A. 1976).

[8] Bambu Sales, Inc. v. Sultana Crackers, Inc. , 683 F. Supp. 899 (1988).

[9] Hy-Cross Hatchery, Inc v. Osborne 303 F.2d 947, 950 (C.C.P.A. 1962)

Current Legal Analysis

More from lewis roca rothgerber llp, upcoming legal education events.

Sign Up for e-NewsBulletins

IP Tech Knowledgy

Use Trademark’s Magic Words: Assignments Must Include ‘Goodwill;’ Licenses Must Include ‘Quality Control’

The two most common transactions relating to trademarks each require specific words to be effective. Trademark assignments must include “goodwill;” trademark licenses must include “quality control.” To ensure the transfer of a trademark is valid, the assignment must include the goodwill of the business associated with the mark. Trademarks represent the goodwill of a business, which is different from the accounting principle of goodwill listed on a balance sheet. A trademark license must include a provision by which the licensor exerts some manner of quality control over the licensee’s use of the mark. The quality control provisions can be extensive or bare-bones but must always allow the licensor to have some inspection right over the goods or services offered. The licensor must also be certain, on regular occasions, to inspect the goods or services to be sure the licensee is meeting the quality standards. While it is clear that a licensor would want quality control, a licensee should understand the benefit as well. The licensee is using a brand and should want the brand to remain strong by being properly protected with necessary quality control provisions.

Ned T. Himmelrich 410-576-4171 • [email protected]

August 19, 2021

Publications

Himmelrich, Ned T.

Technology & Intellectual Property

The global body for professional accountants

• Search jobs
• Find an accountant
• Technical activities
• Help & support

Can't find your location/region listed? Please visit our global website instead

• Middle East
• Cayman Islands
• Trinidad & Tobago
• Virgin Islands (British)
• United Kingdom
• Czech Republic
• United Arab Emirates
• Saudi Arabia
• State of Palestine
• Syrian Arab Republic
• South Africa
• Africa (other)
• Hong Kong SAR of China
• New Zealand
• Our qualifications
• Getting started
• Your career
• Apply to become an ACCA student
• Why choose to study ACCA?
• ACCA accountancy qualifications
• Getting started with ACCA
• ACCA Learning
• Register your interest in ACCA
• Learn why you should hire ACCA members
• Why train your staff with ACCA?
• Recruit finance staff
• Train and develop finance talent
• Approved Employer programme
• Employer support
• Resources to help your organisation stay one step ahead
• Support for Approved Learning Partners
• Becoming an ACCA Approved Learning Partner
• Tutor support
• Computer-Based Exam (CBE) centres
• Content providers
• Registered Learning Partner
• Exemption accreditation
• University partnerships
• Find tuition
• Virtual classroom support for learning partners
• Find CPD resources
• Your membership
• Member networks
• AB magazine
• Sectors and industries
• Regulation and standards
• Advocacy and mentoring
• Council, elections and AGM
• Tuition and study options
• Study support resources
• Practical experience
• Our ethics modules
• Student Accountant
• Regulation and standards for students
• Your 2024 subscription
• Completing your EPSM
• Completing your PER
• Apply for membership
• Skills webinars
• Finding a great supervisor
• Choosing the right objectives for you
• Regularly recording your PER
• The next phase of your journey
• Your future once qualified
• Mentoring and networks
• Advance e-magazine
• Affiliate video support
• An introduction to professional insights
• Meet the team
• Global economics
• Professional accountants - the future
• Supporting the global profession
• Download the insights app

Can't find your location listed? Please visit our global website instead

• Accounting for goodwill
• Study resources
• Financial Reporting (FR)
• Technical articles and topic explainers

Accounting for goodwill is a key part of business combinations and is therefore regularly examined as part of the Financial Reporting (FR) exam. Goodwill arises when one entity (the parent company) gains control over another entity (the subsidiary company) and is recognised as an asset in the consolidated statement of financial position. Under IFRS 3, Business Combinations , goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognised. Goodwill is not amortised but must be tested annually for impairment.

The calculation of goodwill is as follows:

In the FR exam, this can be worth many marks and contain many forms of adjustment. Each of these lines will be looked at in turn for the major elements which need to be included.

1. Consideration paid

The consideration paid for a subsidiary can take many forms. The common situations arising in the FR exam are that the parent pays for the subsidiary in cash immediately, in cash payable in the future (deferred consideration), in cash payable in the future but where that payment is dependent on certain events (contingent consideration), or through an issue of its own shares to the original shareholders of the subsidiary. In addition to this, candidates will need to know the correct treatment for professional fees incurred as part of the acquisition.

Cash consideration This is the simplest amount of consideration and represents the cash already paid by the parent as part of the acquisition. You will be told this and it will usually be included in the ‘investments’ line of the parent’s statement of financial position and simply needs to be moved into the goodwill calculation.

Deferred consideration This is cash payable in the future and needs to be recognised initially at present value. For the FR exam, if the amount is payable in one year, the candidate will be given a discount rate (%) and be asked to calculate this. If the amount is payable in more than one year, the candidate will be given a discount factor as a decimal. The key is to initially recognise the amount payable at present value in goodwill and as a liability.

As time elapses, the discount on the liability must be unwound as the payable date approaches. The unwinding of the discount on the liability is done by increasing the liability and recording a finance cost. A key thing to note here is that goodwill is unaffected, as goodwill is only calculated at the date control is gained.

EXAMPLE 1 Laldi Co acquired control of Bidle Co on 31 March 20X6, Laldi Co’s year end. The purchase consideration included $200,000 payable on 31 March 20X7. An appropriate discount rate for use is 6%.

Required: Calculate the amount of deferred consideration to be recognised at 31 March 20X6 and explain how the unwinding of any discount should be accounted for.

Answer The goodwill calculation would include deferred consideration of $188,679 being $200,000 x 1/1.06 1 . This would also be included in the consolidated statement of financial position at 31 March 20X6 as a current liability.

In the year ended 31 March 20X7, this discount of $11,321 ($188,679 x 6%) would then be unwound and recorded as a finance cost in the statement of profit or loss. The full liability of $200,000 would be settled on 31 March 20X7, consisting of the $188,679 originally recognised plus the $11,321 of finance costs.

Contingent consideration In the FR exam, this will take the form of a future cash amount payable dependent on a set of circumstances. In accordance with IFRS 3, this must be recognised initially at fair value (which will be given in the exam). This fair value is added to the consideration as part of the goodwill calculation and recognised as a provision in liabilities in the consolidated statement of financial position.

Any subsequent movement in the potential amount payable is treated like a movement in a provision under IAS 37 Provisions, Contingent Liabilities and Contingent Assets. Any increase or decrease in the amount payable is reflected in the liability and recorded in the parent’s statement of profit or loss. Again, it is key to note that the initial calculation of goodwill is unaffected as this is calculated on the date control is gained.

Share consideration This is a tricky calculation but is common in the FR exam. It is likely that this amount will not yet have been recorded, testing the candidate’s knowledge of how the transaction is to be recorded. To do this, a candidate needs to work out how many shares the parent company has issued to the previous shareholders (owners) of the subsidiary as part of the acquisition. To work out the value given to the previous owners, the number of shares issued is multiplied by the parent’s share price at the date of acquisition. This full amount is then added to the consideration paid total. The amount then also needs to be added to the parent’s share capital and other components of equity (share premium) to reflect the shares issued (see Example 3 later in the article).

Acquisition costs All acquisition costs, such as professional fees (legal fees, accountant fees etc), must be expensed in the statement of profit or loss and not included in the calculation of goodwill. Often in the FR exam this will have been recorded incorrectly, perhaps included in the statement of financial position as part of the cost of investments, and you need to make a correcting adjustment.

2. Non-controlling interest

Under IFRS 3, the parent can choose to measure any non-controlling interest at either fair value or the proportionate share of net assets.

There are two potential ways that the fair value method will arise in the FR exam. The fair value of the non-controlling interest at acquisition may be directly given to candidates, or they may have to calculate the fair value by reference to the subsidiary’s share price . To do this, the candidate will simply have to multiply the number of shares held by the non-controlling interest by the subsidiary’s share price at the date of acquisition.

Under the proportionate share of net assets method, the value of the non-controlling interest is simpler to calculate. This is done by calculating the net assets of the subsidiary at acquisition and multiplying this by the percentage owned by the non-controlling interest.

Under the fair value method, the non-controlling interest at acquisition will be higher, meaning that the goodwill figure is higher. This is because including the non-controlling interest at fair value incorporates an element of goodwill attributable to them. Under this method the goodwill figure therefore includes elements of goodwill from both the parent and the non-controlling interest.

Including the non-controlling interest at the proportionate share of the net assets is really reflecting the lowest possible amount that can be attributed to the non-controlling interest. This method shows how much they would be due if the subsidiary company were to be closed down and all the assets sold off, incorporating no goodwill in relation to the non-controlling interest. Under the proportionate method, the goodwill figure is therefore smaller as it only includes the goodwill attributable to the parent.

3. Net assets at acquisition

At the date of acquisition, the parent company must recognise the assets and liabilities of the subsidiary at fair value. This can lead to a number of potential adjustments to the subsidiary’s assets and liabilities.

The most common situations in the FR exam are outlined below:

• Tangible non-current assets – These will be held at carrying amount in the subsidiary’s financial statements but will need to remeasured to fair value in the consolidated statement of financial position. This will result in an increase to property, plant and equipment. Instead of recording a revaluation surplus, it will actually result in a decrease to goodwill (being the difference between the consideration paid and the net assets acquired in the subsidiary).
• Intangible assets – The subsidiary may have internally generated intangible assets, such as an internally generated brand, which do not meet the recognition criteria of IAS 38 Intangible Assets. While these cannot be capitalised in the subsidiary’s individual financial statements, they must be recognised in the consolidated statement of financial position. This will result in an increase in intangible assets with a corresponding decrease in goodwill.
• Inventory – The subsidiary must hold any inventory at the lower of cost and net realisable value, but this must be reflected in the consolidated statement of financial position at fair value. This will result in an increase to inventory and a decrease in goodwill.
• Contingent liabilities – These will simply be disclosure notes in the financial statements of the subsidiary, relating to potential future liabilities that do not have a probable outflow of resources embodying economic benefits. In the consolidated statement of financial position these must be recognised as liabilities at fair value if there is a present obligation and it can be reliably measured. This will increase liabilities in the consolidated statement of financial position and actually increase goodwill (as the net assets of the subsidiary at acquisition will be reduced).

4. Impairment of goodwill

The final element to consider is the impairment of goodwill. Impairment arises after the acquisition and reflects some form of decline in the expected benefit to be derived from the subsidiary. As mentioned earlier, there is no amortisation of this figure, so the parent must assess each year whether there are indicators that the goodwill is impaired.

There are many indicators of impairment, ranging from loss of customers in the subsidiary to the departure of key staff or changes in technology. If an entity decides that the goodwill is impaired, it must be written down to its recoverable amount. Once goodwill is impaired, the impairment cannot be reversed.

The cumulative impairment is always deducted in full from the goodwill figure in the statement of financial position. If the non-controlling interest is recorded at fair value, then a percentage of impairment will be allocated to them (based on the percentage owned in the subsidiary), with the remainder being allocated to the group. If the non-controlling interest is held at the proportionate method, then the entire impairment is allocated to the group due to the fact that no goodwill has been attributed to the non-controlling interest.

EXAMPLE 2 Fifer Co acquired 80% of the equity shares of Grampian Co on 1 January 20X4 for $5,000,000. The fair value of Grampian Co’s net assets at the date of acquisition was $4,000,000.

At 31 December 20X4, Fifer Co has determined that goodwill is impaired by 10%.

Required: For each of the following scenarios, calculate the value of goodwill at 31 December 20X4 and explain how the impairment loss would be allocated between the group and non-controlling interest:

• Non-controlling interest is valued at its fair value of $1,000,000; and
• Non-controlling interest is valued as a proportionate share of net assets.

1. Fair value method

The fair value method of calculating goodwill incorporates both the goodwill attributable to the group and to the non-controlling interest. Therefore, any subsequent impairment of goodwill should be allocated between the group and non-controlling interest based on the percentage ownership.

Non-controlling interest will be allocated $40,000 (20% x $200,000) of the impairment loss and the group will be allocated $160,000 (80% x $200,000).

2. Proportionate share of net assets method

The proportionate share of net assets method calculates the goodwill attributable to the group only. Therefore, any impairment of goodwill should only be attributed to the group and none to the non-controlling interest.

The group will be allocated the full $180,000 of impairment loss.

EXAMPLE 3 This comprehensive example is an adaptation of a previous consolidation question looking at many of the elements of goodwill outlined above. This is good practice for how a consolidated statement of financial position question might be asked, with a common format of presenting the answer. This question contains other adjustments, so it is important that you have read through other learning materials on group accounting, including associate companies, before attempting it.

On 1 October 20X6, Plateau Co acquired the following non-current investments:

• Three million equity shares in Savannah Co by an exchange of one share in Plateau Co for every two shares in Savannah Co, plus $1.25 per acquired Savannah Co share in cash. The market price of each Plateau Co share at the date of acquisition was $6, and the market price of each Savannah Co share at the date of acquisition was $3.25. At 1 October 20X6 Savannah Co had retained earnings of $6 million.
• Thirty percent of the equity shares of Axle Co at a cost of $7.50 per share in cash. At this date Axle Co had retained earnings of $11 million. Only the cash consideration of the above investments has been recorded by Plateau Co. In addition, $500,000 of professional costs relating to the acquisition of Savannah Co are included in the cost of the investment. The summarised draft statements of financial position of the three companies at 30 September 20X7 are shown here .

The following information is relevant:

(i) At the date of acquisition, Savannah Co has an unrecognised internally generated brand name. This was deemed to have a fair value of $1m at 1 October 20X6 and has not suffered any impairment since acquisition.

(ii) On 1 October 20X6, Plateau Co sold an item of plant to Savannah Co at its agreed fair value of $2.5m. Its carrying amount prior to the sale was $2m. The estimated remaining life of the plant at the date of sale was five years (straight-line depreciation).

(iii) During the year ended 30 September 20X7, Savannah Co sold goods to Plateau Co for $2.7m. Savannah Co had marked up these goods by 50% on cost. Plateau Co had a third of the goods still in its inventory at 30 September 20X7. There were no intra-group payables/receivables at 30 September 20X7.

(iv) At the date of acquisition, the non-controlling interest in Savannah Co is to be valued at its fair value. For this purpose, Savannah Co’s share price at that date can be taken to be indicative of the fair value of the shareholding of the non-controlling interest. Impairment tests on 30 September 20X7 concluded that neither consolidated goodwill nor the value of the investment in Axle Co had been impaired.

(v) The financial asset investments are included in Plateau Co’s statement of financial position (above) at their fair value on 1 October 20X6, but they have a fair value of $9m at 30 September 20X7.

Required: Prepare the consolidated statement of financial position for Plateau Co as at 30 September 20X7.

Answer Consolidated statement of financial position of Plateau Co as at 30 September 20X7 (see here ).

(w1) Group structure: Plateau Co – owned 75% of Savannah Co for 1 year Plateau Co – owned 30% of Axle Co for 1 year

(w2) Net assets of Savannah Co:

(w3) Goodwill:

Tutorial note: The consideration given by Plateau Co for the shares of Savannah Co works out at $4.25 per share – ie consideration of $12.75m for 3 million shares. This is higher than the market price of Savannah Co’s shares ($3.25) before the acquisition and could be argued to be the premium paid to gain control of Savannah Co. This is also why it is (often) appropriate to value the NCI in Savannah Co’s shares at $3.25 each, because (by definition) the NCI does not have control.

The 1.5 million shares issued by Plateau Co in the share exchange, at a value of $6 each, would be recorded as $1 per share as capital and $5 per share as other components of equity (share premium), giving an increase in share capital of $1.5m and a share premium of $7.5m.

(w4) Non-controlling interest:

(w5) Retained earnings:

(w6) Investment in associate:

(w7) Property, plant and equipment  The transfer of the plant creates an initial unrealised profit (URP) of $500,000 being the difference between the agreed FV ($2.5m) and the carrying amount ($2m). This should be eliminated from Plateau Co’s retained earnings and from the carrying amount of the plant to restate as if the transfer had not taken place.

The carrying amount of the plant is reduced by excess depreciation of $100,000 for each year ([$2.5m/ 5years] – [$2m/ 5 years]) in the post-acquisition period. Therefore, the net adjustment in the carrying amount of property, plant and equipment is $400,000.

The excess depreciation charge should also be eliminated on consolidation and, since it will have arisen in Savannah Co’s individual accounts, the elimination of the depreciation will have the effect of increasing Savanah Co’s post-acquisition retained earnings and, consequently, the profits attributable to the non-controlling interest.

(w8) Inventory The unrealised profit (URP) in inventory intra-group sales are $2.7m on which Savannah Co made a profit of $900,000 (2,700 x 50/150). One third of these are still in the inventory of Plateau Co, thus there is an unrealised profit of $300,000.

Tutorial note: In this question, there is no goodwill impairment. If there had been an impairment, say of $1 million, then the full $1 million would have been deducted from goodwill. As the non-controlling interest is recorded at fair value, this impairment would have been split between the non-controlling interest and the parent based on the percentage owned. Therefore $250,000 (25% of the impairment) would be deducted from the non-controlling interest figure in equity and $750,000 (75% of the impairment) would be deducted from retained earnings in equity.

Written by a member of the FR examining team

Related Links

• Student Accountant hub page

Advertisement

• ACCA Careers
• ACCA Career Navigator
• ACCA Learning Community

Useful links

• Make a payment
• ACCA-X online courses
• ACCA Rulebook
• Work for us

Most popular

• Professional insights
• ACCA Qualification
• Member events and CPD
• Supporting Ukraine
• Past exam papers

Connect with us

Planned system updates.

• Accessibility
• Legal policies
• Data protection & cookies
• Advertising

• Bahasa Indonesia
• Eastern Europe
• Moscow Oblast

Elektrostal

Elektrostal Localisation : Country Russia , Oblast Moscow Oblast . Available Information : Geographical coordinates , Population, Area, Altitude, Weather and Hotel . Nearby cities and villages : Noginsk , Pavlovsky Posad and Staraya Kupavna .

Information

Find all the information of Elektrostal or click on the section of your choice in the left menu.

• Update data

Elektrostal Demography

Information on the people and the population of Elektrostal.

Elektrostal Geography

Geographic Information regarding City of Elektrostal .

Elektrostal Distance

Distance (in kilometers) between Elektrostal and the biggest cities of Russia.

Elektrostal Map

Locate simply the city of Elektrostal through the card, map and satellite image of the city.

Elektrostal Nearby cities and villages

Elektrostal weather.

Weather forecast for the next coming days and current time of Elektrostal.

Elektrostal Sunrise and sunset

Find below the times of sunrise and sunset calculated 7 days to Elektrostal.

Elektrostal Hotel

Our team has selected for you a list of hotel in Elektrostal classified by value for money. Book your hotel room at the best price.

Elektrostal Nearby

Below is a list of activities and point of interest in Elektrostal and its surroundings.

Elektrostal Page

• Information /Russian-Federation--Moscow-Oblast--Elektrostal#info
• Demography /Russian-Federation--Moscow-Oblast--Elektrostal#demo
• Geography /Russian-Federation--Moscow-Oblast--Elektrostal#geo
• Distance /Russian-Federation--Moscow-Oblast--Elektrostal#dist1
• Map /Russian-Federation--Moscow-Oblast--Elektrostal#map
• Nearby cities and villages /Russian-Federation--Moscow-Oblast--Elektrostal#dist2
• Weather /Russian-Federation--Moscow-Oblast--Elektrostal#weather
• Sunrise and sunset /Russian-Federation--Moscow-Oblast--Elektrostal#sun
• Hotel /Russian-Federation--Moscow-Oblast--Elektrostal#hotel
• Nearby /Russian-Federation--Moscow-Oblast--Elektrostal#around
• Page /Russian-Federation--Moscow-Oblast--Elektrostal#page
• Terms of Use
• Copyright © 2024 DB-City - All rights reserved
• Change Ad Consent Do not sell my data

An official website of the United States government

Here’s how you know

Official websites use .gov A .gov website belongs to an official government organization in the United States.

Secure .gov websites use HTTPS A lock ( Lock A locked padlock ) or https:// means you’ve safely connected to the .gov website. Share sensitive information only on official, secure websites.

• Local Media Release

Baltimore CBP Officer Overcomes Incredible Challenges and Health Scare to Earn the Commissioner’s Award for Resiliency

BALTIMORE – It’s a remarkable story of bravely juggling a challenging professional career and raising five energetic children while battling through a rare and unforgiving cancer, and it’s a story that earned Sicklerville, N.J., resident Tahira Manns national recognition recently for exceptional resiliency.

Manns, 42, serves as a passenger operations program manager with U.S. Customs and Border Protection’s (CBP) Baltimore Field Office, a Mid-Atlantic regional operations headquarters. On April 22, Troy A. Miller, Senior Official Performing the Duties of the Commissioner, presented Manns with the Commissioner’s Resiliency Award for 2023 during a ceremony at Constitution Hall in Washington, D.C.

Manns was diagnosed in August 2021 with Stage 2B Triple Negative Breast Cancer (TNBC). At the time, she was the sole caregiver for her teen son and daughter, two young nieces, a young nephew, and her 86-year-old grandmother. She also served in a leadership position with CBP’s Mid-Atlantic Intelligence Division, a critical assignment on a team that constantly pored over evolving intelligence and investigated dangerous threats to our homeland.

According to the American Cancer Society, TNBC tends to grow quickly, is more likely to have spread at the time it is found, and is more likely to come back after treatment than other types of breast cancer. Because of this, the survival rates for TNBC are generally not quite as high as they are for other types of breast cancer.

As expected, this was a stressfully terrifying time, so Manns sought comfort by staying busy and focusing on task management – meeting her family’s needs, meeting her work expectations, supporting her peers’ needs, and attacking cancer treatment head on.

“It was hard. My emotions were unstable. Talking about my situation would bring tears to my eyes, but I tried to keep a smile on my face,” Manns said. “I just tried to stay busy. I still had goals I wanted to achieve, and if my time clock was ticking, I still wanted to be remembered for my awesome personality, my love for my family and friends, my work ethic and ambition, and my willingness to always help others.”

Manns is a single-parent and relied on family and friends, the goodwill of neighbors, and especially on her three other children – biological daughter, and adopted son and daughter, all in their early 20’s – to help her through surgery and radiation treatments and with family responsibilities.

“My family and friends were very supportive during this time. The exhaustion and the changes my body was going through were very dramatic,” Manns said. “My oldest daughters would take me to my treatment appointments, and my youngest daughter, who is an aspiring immunologist, helped prepare my meals to ensure that I was eating right; she wouldn’t let me eat junk food.”

Manns, who was raised in Willingboro, N.J., and still lives in Sicklerville, has been with CBP since 2014. She had previously served on CBP’s passenger analysis unit at Philadelphia International Airport, and has been detailed to CBP’s Baltimore Field Office since 2019. She appreciates her leadership, mentors, the very small number of peers who knew of her cancer, and especially her doctors for accommodating her telework option to address her healthcare needs.

“Telework was the best thing that happened in this entire experience,” Manns said. “My doctors were so understanding. They set me up in a private room so that I could still work during my chemotherapy treatments. I really didn’t want my illness to keep me from still achieving my goals, and so I focused on thriving through this traumatic experience.”

“The fact that I have so many people depending on me keeps me moving forward and trying to stay positive,” Manns said.

Manns has completed chemotherapy and continues appointments with her surgical oncologist.

“Tahira Manns is an amazing Hallmark story of inspirational bravery and perseverance through a life-altering health scare to care for her family and satisfy her work responsibilities, and she epitomizes the very resiliency that we hope to instill in all our workforce. She is very deserving of the Commissioner’s Resiliency Award,” said Matthew Davies, CBP’s Acting Director of Field Operations, Baltimore Field Office.

CBP annually hosts its annual Commissioner’s Awards Ceremony to recognize employees for remarkable deeds and accomplishments. CBP presented awards to 294 employees across 21 categories, including recognition for heroism, safety, integrity, best practices, volunteer service, and leadership. The Commissioner Awards recognized both individual and team performance. Read more about the CBP Commissioner’s Awards ceremony .

CBP's border security mission is led at our nation’s Ports of Entry by CBP officers and agriculture specialists from the Office of Field Operations. CBP screens international travelers and cargo and searches for illicit narcotics, unreported currency, weapons, counterfeit consumer goods, prohibited agriculture, invasive weeds and pests, and other illicit products that could potentially harm the American public, U.S. businesses, and our nation’s safety and economic vitality.

See what more CBP accomplished during " a Typical Day ." Learn more about CBP at www.CBP.gov .

Follow the Director of CBP’s Baltimore Field Office on X (formerly Twitter) at @DFOBaltimore for breaking news, current events, human interest stories and photos, and CBP’s Office of Field Operations on Instagram at @cbpfieldops .

U.S. Customs and Border Protection (CBP) is America's frontline: the nation's largest law enforcement organization and the world's first unified border management agency. The 65,000+ men and women of CBP protect America on the ground, in the air, and on the seas. We facilitate safe, lawful travel and trade and ensure our country's economic prosperity. We enhance the nation's security through innovation, intelligence, collaboration, and trust.

• Practical Law

Assignment of intellectual property rights (pro-assignee)

Practical law uk standard document 0-500-7124  (approx. 29 pages), get full access to this document with a free trial.

Try free and see for yourself how Practical Law resources can improve productivity, efficiency and response times.

About Practical Law

This document is from Thomson Reuters Practical Law, the legal know-how that goes beyond primary law and traditional legal research to give lawyers a better starting point. We provide standard documents, checklists, legal updates, how-to guides, and more.

650+ full-time experienced lawyer editors globally create and maintain timely, reliable and accurate resources across all major practice areas.

83% of customers are highly satisfied with Practical Law and would recommend to a colleague.

81% of customers agree that Practical Law saves them time.

• Trade Marks
• General Commercial