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Hi,
There is a question in BPP I would need some explanation about.
C Co acquired 70% of B Co’s 100K $1 ordinary shares for $800K when the RE of B Co were $570K.
B Co also has an internally generated customer list which has been valued at $90K. The NCI in B Co has a FV of $220K at the date of acquisition.
What was the goodwill arising on acquisition?
The answer given in the book is $350K, i.e.:
Consideration transferred 800
NCI @ acquisition 220
Net Assets (RE + Shares) 670
Goodwill 350Why the customer lists FV is not included in the net assets of the acquired entity? It is an identifiable asset, it has a valuation (cost can be measured) and we could expect future economic benefits.
It was my understanding, that if it was e.g. a brand value instead we would include it into total of net assets as identified and measured intangible, why is it different for customer lists?
Thanks a lot in advance!
Hi,
The customer list can be capitalised as part of a business combination, so would be included within the net assets acquired. Is there something additional in the question that highlights why it might not be?
Thanks
Hi,
Thanks for reply!
No, the whole question as in the book is right there.
So then it must be an ommission in the answers bank of the book
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