FRdec 2010 Premier Q 1

Hi, 1st question: why loan note of $800 is not added back to NCL? Well, basically, parents issues loan notes for Subsidiary, you can can consider it is kind of inter-company transaction/ balance, thats why you cancel it on consolidation. 2nd question: 800 is added in goodwill calculation, to calculate the amount of investment. The company ALREADY RECORDED this (included in Investment of $1800). When doing consolidation, the principle is eliminate the investment in subsidiary (and also only account for Parent's equity) , thats why you have to deduct it. Hope this helps a bit,