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If the question says that the parent acquired 50% of the Sub’s 10% loan notes, why aren’t the loan notes included in the cost of investment calculation?
Because this acquisition of loan notes is not an amount paid to the former shareholders of the subsidiary to achieve control of the subsidiary. It’s a borrowing by the subsidiary and an investment by the parent – and thus it’s cancelled out on consolidation
I think I’m correct in saying that only once in the past were the loan notes acquired from the existing holders of those notes and even then they were acquired at par / face value so the acquisition of those notes had no affect on the goodwill calculation
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