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chapter 4 example 2

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › chapter 4 example 2

  • This topic has 5 replies, 2 voices, and was last updated 5 years ago by Stephen Widberg.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • May 14, 2020 at 3:05 pm #570828
    misbahkiran
    Participant
    • Topics: 109
    • Replies: 194
    • ☆☆☆

    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?

    May 14, 2020 at 8:34 pm #570867
    Stephen Widberg
    Keymaster
    • Topics: 16
    • Replies: 3411
    • ☆☆☆☆☆

    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

    May 14, 2020 at 11:00 pm #570902
    misbahkiran
    Participant
    • Topics: 109
    • Replies: 194
    • ☆☆☆

    then later is full goodwill method?

    May 15, 2020 at 5:08 pm #570954
    Stephen Widberg
    Keymaster
    • Topics: 16
    • Replies: 3411
    • ☆☆☆☆☆

    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

    May 15, 2020 at 10:02 pm #570971
    misbahkiran
    Participant
    • Topics: 109
    • Replies: 194
    • ☆☆☆

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

    May 16, 2020 at 1:19 pm #571032
    Stephen Widberg
    Keymaster
    • Topics: 16
    • Replies: 3411
    • ☆☆☆☆☆

    My pleasure

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Viewing 6 posts - 1 through 6 (of 6 total)
  • The topic ‘chapter 4 example 2’ is closed to new replies.

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