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Hello sir,
the following formula, is not clear why the NCI added back, also despite the goodwill is a part of the net assets, it has been deducted from the sales proceeds ?
When a company values non-controlling interests at fair value, the formula for calculating the gain or loss on disposal of a subsidiary is shown below.
Sale proceeds
XLess: Carrying amount of goodwill at date of disposal
(X)Less: Net assets at date of disposal
(X)Add back: Non-controlling interest at date of disposal
XGain/loss on disposal
Because the sale proceeds belong to the parent selling the shares whereas the assets in the formula are the total assets of the subsidiary being disposed of
So we need to compare only our share of the assets with the sale proceeds to determine the profit on the disposal and we achieve that by deducting the nci’s share of the assets from the total value of the assets
Is that better?
Just noticed that you have the same post in the P2 forum! Are you checking up on us? This is very naughty of you – please don’t do this again
First,I apologize
i repeated the question to get the quicker response , as the exam time is very closed .
But you were quicker than i expected.
About the answer, that is clear now for the NCI.
But, for the goodwill !!may be due to the holding paid for that goodwill before, therefore, it is deducted from the sales proceeds ?
We’ve sold the subsidiary
The asset of goodwill arose on the acquisition of the subsidiary
The subsidiary is no longer there
So neither is the goodwill
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