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When control is retained,
1. My lecturer taught me that when NCI is using partial goodwill method,
the adjustment to equity is derived at;
FV of consideration received – x
(-) FV of net assets on DOD x % of increase in NCI – (x)2. and for full goodwill method
the adjustment to equity is derived at:
FV of consideration received – x
(-) FV of net assets on DOD x % of increase in NCI – (x)
(-) Full goodwill x % of increase in NCI – (x)In example 5, chapter 4 in OT lecture video n notes the NCI is valued at “partial goodwill”.
however, in the video lecture, you used the method 2, full goodwill method, while the question says nci is proportionate of net assets.
is it right about the method 1 & 2?
just in case i misinterpret what my lecturer taughtaddition: i checked with the examples provided in BPP latest text book, and yes, there’s no goodwill included when the nci is value at proportionate of NA.
Ashanti question seems to include the goodwill in arriving at the adjustment in equity(balancing figure) since it uses the full goodwill method. (i can’t find any past year on disposal where the control is retained and uses partial goodwill method”
Hi – if the nci is valued on a proportionate basis, they have no goodwill attributable to them so they are not in any position to transfer any of the goodwill (they don’t have any to sell!)
Have I been inconsistent in the lecture?
i think in your lecture, for example 5, you included goodwill in your calculation to arrive at the adjustment to equity figure.
so it suppose we don’t include the goodwill right?
That’s the way I believe that it should be done – I read an article in Student Accountant relatively recently and it was putting a fox in the hen house. Admittedly I was a bit taken aback when the figures proposed by the article suggested most improbable situations (eg cost of 60% holding 200m with a value for the nci 40% given as 210m – it didn’t look to me like any realistic situation!) but as a result of that article I was moved to amend my course notes if not the lectures
I’m still of the opinion that, if nci is valued proportionately, they have no goodwill to sell but maybe you too should find that article – sometime late last year from memory and see what you think
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