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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
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
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.
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