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Dear Mr. Mike,
Kindly note that I m a self studying for ACCA-P2 and a student joint obtaining exemptions for fundamental level…..in my previous studies, We used to calculate the Good wilI using a “T” shape account called “Cost of Capital”.there, We debited the investment amount of parent in subsidiary and credited the parent’s proportionate share of subsidiary’s net assets ( Share capital+ return earnings+ reserves of subsidiary). then deficit credit balance of the above T-shape account reflects the good will arisen on consolidation and the same amount debited to Good will account.
but, You have calculated the good will in a different way……
so pls advise me which method to use and if i will use my previous method, as i’m more familiar for that method. will it cause for loose some marks.Thanks
BR, PriyanthaHi
When I started teaching we used to use the T account approach and I suppose that it’s still available for use now.
Without thinking too deeply about it I could believe that there may be problems with the non-controlling interest because the value of their investment as at date of acquisition is also involved in the calculation of goodwill
I suggest that you try to become familiar with the approach that is used nowadays – not just by me but also by the approved tuition providers and, importantly, by the examiner himself!
It’s an easy transition to make – I had to do it myself and it really is quite straight forward. What would be beneficial for you is to work through the consolidation chapters in the free course notes for F7 paying particular attention to the workings that I then carry forward into the P2 course notes
Post again if you encounter any problems
Dear Sir,
Have a nice day….
Really appreciating your kind & prompt support …..
Thanks again
BR,
Priyantha
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