[zurliana]

For contingent consideration,

if the fair value was given , must i calculate the present value to calculate and include it in consideration

[zurliana]

Hi,

Sorry I have worked through the question, I assumed there was a word limit to my post and was unaware that it actually posted as it said error.

For the calculation of goodwill I am aware its …

Consideration
-cash
-Deferred Cash
– Issued shares my Parent company
– Contingent shares

NCI

Less FV of Net assets
-ordinary share capital
-Retained earnings
-Fair value adjustments

Question
1. Contingent Shares – The FV of the contingent share was given therefore for full goodwill method I have used the value of £4,000 however, I am unsure if the same value would be used for the partial goodwill method.

2. I am aware that the 30% of the holdings in the Sub is referring to the NCI therefore for the full goodwill method NCI is £3,200 as stated. For partial goodwill method I am also aware to calculate it, it must be 30% of the net assets acquired in sub. My difficulty is measuring the net assets. I have put ordinary share capital as £400 as the sub has 400 million shares @£1 each. Retained earnings I have put £1,460 as stated. However I am unsure what to do for fair value adjustments with the intangible assets worth £5,000. I know for intangible asset, if they are internally generated they are not recognised as assets unless they can be measured reliably. However because the value of the intangible asset is given i assume it must be recognised in the financial statement therefore do I add the value of £5,000 (intangible assets) to the Net assets acquired? I also know intangible assets must be tested for impairment annually. The intangible assets have a finite useful life therefore will the value of the intangible asset be recognised for impairment on the day of acquisition?

Sorry for the long question. I hope I have explained it well. Thank you for making time to help.

[Author]

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