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Hello
Could you please help me with the below question?At the 1st of January 20×2 Y acquired 75% of the share capital of Z for $400,000. At that date the share capital of Z consisted of 600,000 ordinary shares of 50c each and its reserves were $50,000.
The fair value of NCI at the date of acquisiton was $100,000.What amount should appear for goodwill int eh consolidated statement of finan position of Y and its subsidiary z at 31 december 20×6
a) 150000
b) 137,500
c) 55,000
d) 110,000The correct answer is A, below the calculation
Cost of investment 400,000
NCI acquisition 100,000
Less NA acquistion (350,000)150,000
I didn’t undestand how NA acquistion 350,000 was calculated.
Thanks
GabbiThe net assets at the date of acquisition are equal to the share capital plus reserves at the date of acquisition.
Share capital = 600,000 x $0.50 = $300,000
Reserves = $50,000Total = $350,000
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