Audience: Accounting students.
Many accounting students who are familiar with goodwill may have difficulty grasping negative goodwill. Often known as a bargain purchase when companies are consolidated, negative goodwill can be best explained through its cause and effects.
For instance, assume company A had acquired company B, creating a parent-subsidiary relationship. To account for this, company A would value company B’s net assets at fair market value. If company B had been in a weaker bargaining position than A, the purchase price might be lower than the fair market value of the net assets. Since company A must record the acquired assets at fair value, the difference is instead recorded as a gain on purchase of an investment after reducing any existing goodwill.
If company B had suffered a string of recent operating losses, the perceived value of their net assets could be less than fair value. This would also result in a lower purchase price and negative goodwill for company A.
In both cases, the prospective value of company B was lower than what its net assets were actually worth on the fair market. Since company A paid out less than what B was worth and cannot allocate the difference to the assets purchased, they must be record a gain.
All of us are doing projects for various companies. Many times we are dealing with small business or medium to small sized company. A big concern for these types of businesses is getting a steady flow of customers. To make this happen some businesses have adopted social media to get connected with their customer base. This has proved to be a successful strategy for many businesses.
To get an insight of what and how small businesses use social media www.postling.com , a social media management company for small businesses shares the following information.
What Social networks are small businesses using?
· Twitter – 78%
· Facebook – 75%
· LinkedIn – 30%
· WordPress – 22%
Customer Engagement?
· 24% of accounts linked with www.postling.com are twitter and they account for 50% of comments received across all platforms.
· Even though twitter has high customer engagement, Facebook is considered to be more effective.
Is active engagement of small business effective in COMMUNICATING with customer?
· How often business post on social network and how do customer react to that
o 8+ posts per week by business à 10.27 comments per day
o 1-7 posts per week by business à 0.33 comments per day
o One post per week by business à 0.02 comments per day
· This shows how active engagement on social media helps customer participation.
It is also reported business profiles on social media receives 5.4 comments per day as posed to 3.67 comments per day on personal accounts.
Source: http://mashable.com/2011/02/14/small-business-social-media-infographic/
