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Thank you sir. Jones’ Goodwill is calculated to be $23m, then Reilly disposed off 20% from Jones. In computing the NCI for disposal, 20% of (120+23) was added. My question sir, since 20% was disposed off why that 20% of 23 (goodwill from Jones) being less from total goodwill and get $28.4m instead of $33m, then retained earnings will be less of $4.6m?
I mean why the entries are not as follow?
Dr retained earnings $4.6
Cr goodwill $4.6Being 20% of goodwill disposed
I need more clarification
Hi,
If we have a change in ownership upon the disposal of shares then we only adjust the NCI and group retained earnings. We don’t adjust any of the subsidiary’s individual assets and liabilities as we still have control following the change in ownership, and so they are consolidated in full.
Thanks
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