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Hi sir. When we calculate the question decrease the interest but still retain control over the subsidiary, the calculation on gain /loss to OCE will be Consideration received – Net assets at date disposal *disposal share percentage – Goodwill*Disposal share percentage. However, i have a doubt whether the partial or full goodwill method will affect it? Under full goodwill method, we can take goodwill*%share disposal, so is it same to the partial goodwill method?
Or we need to proportionate the partial goodwill. For example, under partial goodwill method, original the parent holds 80%, after that it dispose20%, so goodwill dispose will be = Carrying Amount of G/W * (2/8) ? Or we can directly take the Carrying Amount of G/W*20%?
Decrease interest but retain control.
1. Do NOT change goodwill.
2. Sale proceeds minus change in NCI is posted to SOCIE (please see our notes and lectures).From the lecturer video, the calculation of increase in NCI is taking (net assets + full goodwill)* share disposal%. I am clear about full goodwill, but how about partial goodwill? As partial goodwill only consist the goodwill of parent company, so when i compute increase in NCI, is that partial goodwill need to multiple by proportion of parent original share percent? For example, under partial goodwill method, original the parent holds 80%, after that it dispose20%, so increase in NCI = Carrying Amount of G/W * (2/8) + net assets* 20%?
There seems to be little consistency in it’s calculation, so don’t worry too much.
In your example I would go for 20/80 x net assets at date of the change.
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