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Sir why are we subtracting FV of subsidiary’s net assets from 152800 in this example? as per the pattern we subtract impairment of goodwill but add the FV of SNA.
Hi Ema
Three things are puzzling me about your post.
1) I can see no mention of $152,800 in example 6, neither in the question nor in the solution
2) We ALWAYS subtract the fair value of the subsidiary’s net assets from the aggregate “value” of the cost of acquisition + the value attributable to the nci and I presume that that is what has happened here
3) I have absolutely no idea at all about this next comment of yours! “as per the pattern we subtract impairment of goodwill but add the FV of SNA.”
What on earth are you talking about?
1. I have also checked the solution just now. It isn’t mentioned here but in your lectures the cost of NCI investment was $152800 in the working of goodwill.
2. Cost of investment X
NCI investment valuation X
X
Net assets @ doa
$1 Equity shares X
Retained earnings X
X
Goodwill X
Impaired since acquisition (X)
Therefore, on CSoFP (X)
That is the format mentioned in your notes.
You haven’t mentioned brackets around the sum of equity and retained earnings which show that are to be added. Am I right? but in the example you are subtracting that actually.Oh please! Please don’t tell me that a lack of brackets has caused you such confusion!
$152,800 is from example 8, not from example 6!
Yes sir! that caused the confusion actually. As we normally show the negative or values to be subtracted in brackets.
yeah that is example 8 you are right! but I actually wrote this question just after watching out the solution in your lecture only. I was about to ask that from where this value was taken” $1.65″? but thankfully I read comments below your lecture!
In future, if I remember, I shall put any figure that is to be deducted from a larger figure in brackets …. and in red …. and I shall put a “-” sign in front too!
That should do it and avoid any future confusion 🙂
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