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Hi sir, in the exam, if the question do not mention which goodwill method ( partial or full goodwill method) to be used for preparing the consolidation account. What should we use? Or any indication on the question can give a hint? Thanks.
Hi,
It will usually tell you which method to use in the exam. If it doesn’t then you can easily tell which method to use based on the information in the question.
If you aren’t give the fair value of the NCI or a share price of the subsidiary at acquisition then you have to use the partial goodwill method, taking the NCI share of net assets to value the NCI.
If you’re given the FV of the NCI then use the full goodwill method.
Whichever method you are asked to use you should be confident about using both.
Thanks
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