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Hi Mike,
I’m working the goodwill calculation for Tyzo Co (parent) and Kono Co (subsidiary) pg 150 of text.
Upon acquisition Tyzo acquired 6 million $1 shares in Kono at 2.00 per share (75%) of a total of 8 million).
It goes on to give the assets as well as fair value adjustments. I had no problem in calculating the net asset value or to calculate goodwill.
NCI was recognised at full fair value. I took 25% of the NAV to find NCI at fair value and consequently goodwill. However, the answer for NCI was calculated by taking 25% of the equity x 2.00 per share. I took the 2.00 as being the consideration paid by Tyzo and not the market price as question is not clear.
Isn’t full fair value taken to be the fair value of the NAV?
Thanks
ClaireNo!
Where the nci is measured on a PROPORTIONATE basis, that’s when the calculation is their proportionate share of the fair valued net assets
It is more commonly the case that a question will specify that “NCI was recognised at full fair value and, for these purposes, the share price immediately before the acquisition is representative of the fair value” … or similar words
The other matter that is commonly the case is that nci will be measured on this full fair value basis and NOT on a proportionate basis – I don’t remember a question where proportionate basis was asked in F7
OK?
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