When we purchased sub A we used push-down accounting and recorded goodwill in the acquired sub. Subsequently we have moved half the business from sub A to the parent. Under US GAAP can we also transfer half the goodwill from sub A to the parent?
Can goodwill recorded in acquired sub be moved to the parent as a result of migrating line of business from the sub to the parent?
Answers
I will ask you a question further down the decision tree and maybe another perspective on how to look at this transaction...
What is going to be your reasonable basis for apportioning out the "goodwill" associated with the business line? Goodwill may not necessarily mean the equivalent percentage of what you are transferring out since goodwill is usually the result of the sum of all parts. Take out the half (for the business line) and the other half may be worthless and gets stuck with the sub.
Entertain or accept the idea that a goodwill revaluation and/or write-off (partial) may be in your future.
2
The apportioning of the goodwill would be based on valuations. Valuations of the sub prior to and after moving the LOB. I just don't know if US GAAP allows this type of transaction. Any help in locating specific literature that relates to this type of transaction is greatly appreciated.
(1) If you are going to revalue, isnt the transfer (question) moot?
(2) I believe ASC 850 still applies...only the principles are applied in reverse. CONTROL still being the main factor.