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when calculating adjustment to parent equity when a disposal happens, we have to calculate decrease in net assets(from parents POV) and in that we usually include the fair value adjustments and NCV of goodwill along with carrying value of net assets.
so if there is a further acquisition we calculate decrease in NCI(from NCI’s POV) for the adjustment to parent equity calculation.
in there we include FV of NCI and NCI share of any post acquisition reserves,
Don’t we have to include NCI share of the goodwill as well?
It depends on how we’ve calculated the goodwill. If it under the full goodwill method then the NCI share will be included. If it is under the partial goodwill then the NCI do not own any of the goodwill and so it is not included.
Okk Thanks Alot?
You’re welcome. Glad to have helped.
May you please explain to me more on valuation of subsidiary’s net assets in business combinations .i’ve met a question like this
P purchased 60% of the shares of S on 1 January 20X1. At the acquisition date, S had share capital of $10,000 and retained earnings of $190,000.
The property, plant and equipment of S includes land with a carrying value of $10,000 but a fair value of $50,000.
Included within the intangible assets of S is goodwill of $20,000 which arose on the purchase of the trade and assets of a sole trader business. S has an internally generated brand that is not recognized (in accordance with IAS 38). The directors of P believe that this brand has a fair value of $150,000.
in the solution they added the brand’s fair value so my question is why??
Brilliance, can you please post your question in a new thread as the answers will get lost in this one. I’ll answer it when you do.