December 2009, Q1, Note (ii) — OpenTuition Forums

Iilovedahae15y ago

When the note says 'Immediately after its acquisition' which means post-acquisition, isn't it? Why do we have to include £2m interest into Salva's goodwill calculation? The answer says 'Salva's profit for the year of £21m has a split of £11.5m pre-acquisition ((21m + 2m ) x 6/12) and £9.5m post-acquisition.

Can anyone explain this for me please?

Many thanks

MMikeLittleTutor15y ago#1

Sorry, don't know the question. However, from the way you have described it, it looks like the profits do not accrue evenly because of the 2m which related specifically to the pre-acq period

Iijaz15y ago#2

hi.i am not sure but the only logic which comes to my mind is that as $2m interest is deducted from the profit of the salva; and the profit fig for y/e 30/09/2009 is $21m. had it not been deducted from the profit we had a profit of 21+2=23. if you split it between two 6 monthly halves each half will get $11.5m profit share. so now we have to add pre acquisition profit so we will take $11.5m for first half of 6 months and the second half profit will be adjusted to $9.5m.