chapter 4 example 2 — OpenTuition Forums

Mmisbahkiran6y ago

Hi sir as per technical article of ACCA proportionate share of goodwill is "The traditional measurement of goodwill on the acquisition of a subsidiary is the excess of the fair value of the consideration given by the parent over the parent’s share of the fair value of the net assets acquired. This method can be referred to as the proportionate method. It determines only the goodwill that is attributable to the parent company." why in solution to this example 2 of OT notes the working of goodwill add share of NCI?

stephenwidbergTutor6y ago#1

You can either do COST MINUS P % NET ASSETS OF SUB or COST PLUS NCI % OF SUB NET ASSETS MINUS 100% NET ASSETS OF SUB The answer is the same but we are following the formula in IFRS 3 - I'm sure that's what you would have done in F7. The marker would expect to see the latter method

Mmisbahkiran6y ago#2

then later is full goodwill method?

stephenwidbergTutor6y ago#3

No - they are both ways of calculating proportionate GW Full GW uses FV of NCI not NCI share of S's net assets Have a look at P144 of FR (not SBR) notes

Mmisbahkiran6y ago#4

thank you so much sir now I got the difference between two.

stephenwidbergTutor6y ago#5

My pleasure

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