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Hi,
Technical question.
Why when calculating the profit or loss on a disposal (when control is lost) why do you add goodwill to the net assets in ‘share of the consolidated CV at date of control lost.’
I thought it the if the net assets were included in the the ‘share of the consolidated CV at date of control lost’ then the net assets would include goodwill.
By adding it on are you not accounting for it twice.
Help please.
B
No, the net assets of the subsidiary are the net assets according to the subsidiary’s records and the subsidiary will not be recording any goodwill
Think about this …… the only time in a consolidation exercise that you have EVER done (F3, F7 and now P2) you have never seen goodwill as an asset in the subsidiary’s records. Agreed?
It’s created as a consequence of the consolidation exercise
Better?
I love the heading of this post!
I’m still smiling at the thought of losing the disposal
Of course. Makes perfect sense now. The goodwill is the value above the fv of the sub net assets when completing a consolidation.
Just read title again, funny. You can you tell it’s been a long day studying!!
Cheers
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