Business combination with negative net assests

[Margo101]

Hello everyone! Please could you help me to find a solution to the issue:
The company A is intended to acquire company B. Company B has negative net assets. The acquisition include cash consideration.
In this case what accounting treatment could be used? Should the difference betweent the negative net assets and cash consideration accounted as a goodwill? Are there any impairement issues?

[JRSB]

Yes goodwill is created; maybe when you get to the impairment test the business is doing better (since you're acquiring it)... negative nets assets doesn't necessarily mean not profitable/not forecasting profits etc

[Marek Muc]

Acquirers often recognise assets that haven't been recognised by the acquiree (e.g., customer contracts & related relationships), so you may end up with positive net assets even before recognising goodwill.

Anyway, as JRSB wrote, goodwill can arise even if net assets are negative. It's also best to understand what's behind goodwill (synergies, workforce etc).