Chapter 1 Simple Group Consolidation

Hi Tinu,

I’ll try my best to go through your points above.

Goodwill

You use the net assets working to calculate the net assets at the date of acquisition of the subsidiary. The net assets figure that you calculate is then included in the goodwill working, where we deduct any impairment since the date of acquisition. We are not, as you mention, above, deducting this from the net assets at acquisition. We are deducting it from the goodwill that we have calculated at the date of acquisition.

To calculate the NCI we take the NCI at acquisition, using either the fair value of the NCI or the proportionate share of the net assets, depending on which method we are told to use in the question. I think in this question it is the proportionate share method. This figure is then used in the goodwill calculation.

On your second point you’re correct about the pro-rating of the profit to calculate the NCI, though I’m not sure what you’re referring to when you talk about it as a pre-tax item.

You need to work through the material on changes in groups structure to understand how it all works to help you with the last point. In order to help you I’ll need to know exactly what it is that you’re struggling with.

Thanks

Excellent. Glad it all helped out.

Thanks