Business – Goodwill first

A Cheltenham-based building group has become the first company to throw into reverse the goodwill and intangible assets accounting standard FRS10, and has used it to deflate the balance-sheet and boost profits.

Last year, Britannia Group discovered #1.2m of negative goodwill during the buyout of a rival company. Britannia decided to use FRS10 and include a #1m negative intangible asset, although the rule did not take effect until April.

David Errington, the company?s group financial controller, said: ?After a fair value exercise we decided negative goodwill applied to the transaction.?

Edinburgh-based accounts monitor Company Reporting said: ?While many companies are unhappy profits will be hit by large goodwill depreciation charges, the depreciation of negative goodwill increases profit; in Britannia?s case, as a #150,000 reduction to operating expenses.?

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