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Hi teacher,
I have a question on consolidated FS. I do some examples on this topic and wonder why the investment of Parent in subsidiary on SFP and the consideration (use to calculate goodwill) are different? I think it’s both the value of investment in sub so it should be the same?
Pls,explain it for me.
Thank in advance,The usual reason for the difference between ‘Investment in subsidiary” and ‘cost of investment ‘ as used in working W2 Goodwill is because the parent has not recorded the full amount of the consideration
Clearly any CASH element that has been paid as on the date of acquisition will have been recorded
But any loan note issues, any share issues, and deferred cash that is to be paid sometime in the future – these typically in an exam question are often not recorded
Does that explain it for you?
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