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ACCA December 2012 -P2 – Group Question
Dear Sir / Madam,
Can someone please explain me how Goodwill in Heeny was calculated. As we always use following formula to calculate goodwill in NCI but it’s not working
Cost of Investment by NCI ( Fair Value of 20% holding of NCI was 72 Million) – 72
Less 20% of Net Assets – X 362 Million.I am not understanding how ACCA solved example has narrated this calculation. Please help to make me understand
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Group Structure
Group NCI
Bower 70 % 30%
Heeny (70%*80%) = 56% 44%Goodwill of Heeny.
Cost of Investment : $ 320
Indirect Holding Adjustment **** ($ 96)
+ F.V of 44% NCI holding @ Acquisition $ 161
– F.V of 100 % Net Assets @ Acquisition ($ 362)
————
$ 23
————***** 30% Share of NCI x cost of investment in Heeny $ 320. ——–> (This is called Indirect Holding Adjustment)
This $96 must be also taken out from your NCI calculation as well. (This is a prize winner point in Exam)
In short : Dr NCI 96
Cr Goodwill 96
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