• Profile photo of MikeLittle says

      Example 7 is not related to example 6 where the goodwill figure is given (in example 6)

      Instead example 7 illustrates the working W2 where the value of the nci investment is given.

      Similarly example 8 illustrates the working W2 where the value of the nci is based on the market value of the subsidiary’s shares as at date of acquisition

      Example 9 is asking you to rework the workings where you are told that goodwill is to be impaired by 10% – there is a brief explanation of what to do at the bottom of example 8, just before example 9

      If you’re still having problems, post again

      • avatar says

        im a bit unclear as to what to do with the $5000 goodwill attributable to the nci (eg. 6) should i add it to the calculation of the value of the nci investment?

      • Profile photo of MikeLittle says

        We need this information in order that we can arrive at the value of the nci investment as at the date of acquisition

        Concentrating SOLELY on the nci (I show this in the video lectures) nci goodwill is equal to the value of their investment less their proportionate share of the subsidiary’s fair valued net assets.

        Agreed so far?

        We know the value of their goodwill – it’s given in the question

        And we know the value of their proportionate share of the subsidiary’s fair valued net assets

        Therefore we can calculate the value of the nci as at date of acquisition


  1. avatar says

    Dear Mike,
    I didnt know how to start f7 earlier, but once I saw your lecture I really enjoyed it and now I am continued with that. You are so confident on what you say, makes me confident too. You also make us keep smiling with your phrases and thats so funny as well!

    In this video I am curious how you got $1.65 per share at W2 of Example 6?

    Many Thanks

  2. Profile photo of ovandi says

    I just want to say that I have always hated Group accounts and now thanks to these lectures I’m finally learning it the proper way and actually loving it too. The lecturer is so much fun too! :)

  3. avatar says

    Good Day

    Im trying to watch the F7 lectures but when i go into headings i find F3 lectures. at 1st i thought theres some error so i pressed play, and the content is from F3. then i thougth its just me, i looked at the heading again, its written ‘Other Reserves, Mid year acquisition’ but playing F3 lectures.. HELP please.

  4. Profile photo of Swati says

    Dear Mike Sir,

    Regarding the doubt of (Ivona & Guido) Page 40, Example 6 (Ch-7):
    Thanks for the clarification. I have now understood all the 3 cases of the nci investment valuation given in eg 6,7 & 8.


  5. Profile photo of Swati says

    Dear Mike Sir,

    In the question (Ivona & Guido) Page 40, Example 6 (Ch-7):
    What do we do of this information? ‘The Ivona directors have valued the goodwill attributable to the NCI at $5,000′.
    Where have we used this figure in solving this question?

    Here’s the full ques:
    Ivona bought 60% of the shares of Guido for $100,000 when the Guido retained earnings were $40,000. The Ivona directors have valued the goodwill attributable to the nci at $5,000. Goodwill has not been impaired since acquisition. At 30 June, 2010, the respective Statements of Financial Position were

    Many thanks,
    Swati Goyal.

    • Profile photo of MikeLittle says

      Hi Swati

      OK, we need to know the value of the nci investment. (We need that in order to work out the goodwill on acquisition) Tell me the figure for the nci investment at date of acquisition and I’ll calculate the goodwill for you.

      Hear from you soon :-)

      • Profile photo of Swati says

        Dear Mike Sir,

        Referring to:(Ivona & Guido) Page 40, Example 6 (Ch-7):

        I am a bit confused with two things actually:

        1) We have not used the amount ‘5000’ in the working 2 (goodwill). So, if we have not used it here, then how & where is this ‘5000’ used?
        2) Secondly, while calculating the ‘Value of nci investment’, we do: 40% of 80000 shares= 32000. Then 32000x $1.65. My question is. how have we calculated this ‘1.65’?

        Swati Goyal

      • Profile photo of MikeLittle says

        Hi, I’m not surprised that you are confused! You appear to be looking at answers to two different questions at the same time.

        Let’s deal with the $1.65 x 32,000 shares first. That’s actually part of the answer to example 8 on page 42 and has not much relevance to example 6 on page 40. Is that bit ok, now?

        Now, $5,000 goodwill not used anywhere in the answer! Well, it IS in my copy of the notes. And, what’s more, it’s exactly where you would expect it to be – in working W2 Goodwill on page 154.

        I suspect that you have been looking at the wrong answer again as you were with the $1.65 issue.


  6. avatar says

    Mr. Little

    I must say that this will be my first attempt at this paper and after following your lectures i am confident that i will do well. Your ability to simplify is amazing and I honestly wish you were my classroom lecturer here,

    Thank you thus far for making the puzzle worth building ,,,,looking forward to sharing good news when i get results in August …:)

  7. avatar says

    Hi there,

    I am confused as to why the Liabilities (160k + 190K) were not added to the Consolidated Statement of FP of the Ivona group (example 6). The proforma for CS of FP I have been following is this:

    Goodwill (W2) xxx
    Other Assets xxx

    the total of the above two amounts balances off the total of the following amounts:

    Share capital (parent only) xxx
    Retained earnings (W3) xxx
    Nci (W4) xxx
    Liabilities xxx

    Up till now, this hasn’t been a problem. But for the Ivona-Guido example, the ‘Liabilites’ at the end has been completely omitted and the statement balances without it. I am very confused right now. Please explain this!!

    Thank you :)

  8. avatar says

    hello sir… where did u learn teaching techniques ???? the way u explain is the safest and easiest way to understand any hard part of question… u r the man……. wow..thank you..

    • Profile photo of MikeLittle says

      Hi, I don’t have the notes handily available at the moment but, do I not remember that I say immediately before, “now let’s assume that the shares are worth $XXXX” and that will give me the $52,800?

      • avatar says

        It’s the Ivona and Guido question, example 6 with requirement:

        Prepare the consolidated SOFP as at 30 June,2010.

        It’s with working 2 that I’m confused with sir.

        For value of nci investment, you did 40% x 80000 shares which equals to 32000 shares @ 1.65$ each. It’s the 1.65$ each part I didn’t understand where you got it from?

        This consolidation chapter is a bit tough, but I won’t let it affect me, I’ll keep on practicing till I get a good grasp of it :)

      • Profile photo of MikeLittle says

        is it not simply the value of the nci (53,000) divided by the number of shares held by the nci (32,000)?

        It sounds like a throw-away line that I’ve mentioned as I was calculating the total goodwill.

        The $1.65 is not integral to the question – it’s simply a little bit of “extra” information that we can derive from the figures as they work out. In fact, the more correct value would be 53,000 / 32,000 = $1.65625

  9. Profile photo of chandhini says

    hmm.. Why have we not charged any impairment of GW to NCI? Is it because we took the NCI of the Share Capital and multiplied it with the share price, so in effect it means that NCI is a % of the Subsidiary’s Net Assets? Please throw some light on this!

  10. Profile photo of nari says

    I notice in the previous examples , regarding the goodwill working, the NCI is calculated as a % of the net assets consisting of share capital & retained earnings. However, in this question where the share price was increased to $1.65, 40% of the retained earnings was NOT included as part of the NCI value in the goodwill calculation, could you please explain why?

  11. avatar says


    My name is Alicia.

    My question relates to the example 7 on page 41 (Ivona and Guido), were Guido shares were worth $1.65 immediately BEFORE the acquisition by Ivona. I am confused about W2 Goodwill calculation (Fair value of net assets @DOA). Why equity shares have value of $80000? It is not logical for me. Why not 80000 X $1.65 =132000? we are told that Guido shares were worth $1.65 immediately before the acquisition (@DOA). So far everything was clear and easy to understand and now I am a bit lost. Please explain. Many thanks

    • Profile photo of MikeLittle says

      @loopheichuen, Is this an Ivona and Guido example? If so, the same basic figures apply with the exception of me changing the basis of the nci calculation and for that reason I’ve changed the figures so that three different answers are arrived at.

      Otherwise there would be a danger that you may think “there are three ways of arriving at the same figure and I’ll just concentrate on the one I find easiest”

      You need to be comfortable in all three full, fair ways as well as with the proportional method

  12. avatar says

    Ivone is paying $100,000 / 42,000 shares => $2.08 / share while the NCI are paying $1.65/share…which would mean that Ivone would end up at consolidation with a G/w of 20,800, OA 250,000 ->Total assets 270,800? Shares 70,000, Ret ears 120,000 and NCI 80,800…i think I m getting it wrong somewhere…

  13. avatar says

    Hi, at example 8/page 42..I can see why you are computing the G/W as you are doing it, but I don t understand at (w2) why you keep saying FV of SNA@doa if you are actually considering the SNA and not the FV of the SNA. In this example the FV of SNA @doa should be 80,000 shares x $1.65/ share, right? :)

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