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Hie Mike,
would you please explain for me what is “their share of D`s investment in V” under the calculation on the value of V(NCI).THANKS
Hi Mike,
Further to the above, could you please explain when the FV of the NCI at the DOA is used when calculating goodwill for the second company? In questions 1 & 2 it hasn’t been included, but in question 3, it has. Why is this? Thanks.
Hi,
The parent owns 80% of S and S owns 60% of SS, therefore P has an effective controlling interest of 48% (80% x 60%) and effective NCI of 52%.
The info in the question gives the fair value of this NCI when it is referring to their share of D’s investment in V.
The date of acquisition of SS is when the parent gains control which is 1 September 2005. If the two subsidiaries combine at an earlier date we ignore this date as the parent would not have had control. In the previous examples the two subsidiaries didn’t combine at an earlier date and so we do not ignore that date. That is the acquisition date as the parent gained control of the sub-sub at that date.
I hope that answers the two questions.
Thanks
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