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In Lecture of Chapter 23, Second example.
You calculated value of Subsidiary (P’s Investment + Non-Controlling interest) and then compared to entire Share Capital and all Retained earnings to find Goodwill.My question is that why we can not do by just taking Investment by P only (excluding fair value of NCI) and comparing it with 60% of Retained earnings and 60% of Share Capital to find goodwill.
Because we want the total value placed on the goodwill of the subsidiary (just as we bring in the total value of all the assets in the subsidiary) – not just 60% of them.
Also, because this is the rule in the accounting standard and it not our choice 🙂
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