What is the revised calculation / treatment of Goodwill for NCI?
Is this a quotation from something which you have read? A full valuation of nci goodwill involves including their “fair valuation” as at date of acquisition. As the years go by, their investment as at date of acquisition will ( hopefully ) increase by their share of the subsidiary’s post acquisition retained wearnings less their share of any goodwill impairments.
Does that answer your question?
If not, post again
Can you also help me with the possible ways the examiner can put the question which may include the valuation of Goodwill attributable to NCI. eg I know that when the examer says “NCI investment is proportional to their share of net asset at acquisition means NCI Goodwill is zero. or am l wrong?
You are right.
In the question, if it says… NCI is proportional to the share of Net Assets then NCI goodwill is zero.
If it says…. NCI´s Fair Value at acquisition is xxx then it is a full goodwill method, meaning NCI has share of goodwill at acquisition.
The course notes on this site tell you three ways in which the nci goodwill may be asked if it’s not proportional.
He can either say “Goodwill for the nci was $XXXX”
or he can say “The value of the nci investment was $XXXX”
or he can say “The fair value of the subsidiary’s shares at date of acquisition was $2.40 ( say )”
You should be familiar with all three ways
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