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Hi Sir,
My question relates to example 3 (Betty) & Example; when NIC increases due to percentage sale.
When calculating the value of the sales (based on Percentage), in example 3 the net asset of 350 was taken and goodwill of 50 ignored; however in example 5 for Jones, the NA plus GW approach was taken.
May i ask why goodwill used in one example and not in the other.
Regards
There is always some doubt about exactly how to handle NCI in this situation where the control threshold is not passed
I think that if the business is using full goodwill then the adjustment to NCI should take account of the goodwill
If the business is using proportionate goodwill then the adjustment to NCI should not take account of the goodwill
I would not get very stressed about this point because remember the marks for calculations are given now for approach as opposed to an answer that exactly resembles the number in the model answer
The main thing is to make sure that you can express yourself clearly and say that because the control threshold is not passed there is no additional goodwill and /or there is no profit on sale in the P&L
I can see that when we next tidy up the notes we need to make it clearer about what sort of goodwill applies in a particular situation
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