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Dear Mr Little
Thank you for your time. May I clarify my understanding on the Workings pls?
Goodwill,
Goodwill calculation requires comparing ( consideration & Value of NCI @ DOA) to FV of Subsidiary NA @ DOA
However, I need to lay a proforma in calculating the FV of Subsidiary NA @ DOA
Question >>> what is the figure called ? that one that adds up from ( Share capital through to FV adjustment) say $xx?
Then the goodwill impaired since acq { given in question?} is deducted from $xx to give the Subsidiary NA @ DOA ? Am I right pls?
Again the figure gotten from adding ( Share capital through to FV adjustment) say $A is then multiplied by the % NCI to give the value of NCI @ DOA. = $B
The figure $B is added to the consideration say $C and then compared to FV of Subsidiary NA @ DOA = Goodwill. is it?
Secondly
Workings 4B – NCI on SOCI
Please, do you mean the figure of their (NCI) share of this year’s subsidiary adjusted time apportioned should be shown as a pre tax item.
It would then mean that,other items added and subtracted = PAT
Lastly on the profit apportionment. one need be careful upon splitting the profit on a pro rata basis say 6months and taking note of the piecemeal say 40% first six months and 30% the other.
However there was a disposal of NCA by the subsidiary . you lost me around here pls help
Thank you
Tinu
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
Thank you so dearly Mr Little.
I meant all items within the statement of comprehensive income except tax.
ok I sure will and get back if I still have challenges….
Kind regards,
Tinu
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