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december 2011 past question paper

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › december 2011 past question paper

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by MikeLittle.
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  • October 20, 2015 at 1:58 pm #277830
    23aaron88
    Member
    • Topics: 1
    • Replies: 0
    • ☆

    in the suggested answers, (working 3) they have indicated unrecognized NCI (20%) for captive as they are calculating Impairment of goodwill. am failing to figure out how they are coming up with it..please help me understand

    October 20, 2015 at 2:15 pm #277833
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22702
    • ☆☆☆☆☆

    Without me looking up the question and answer, let me see if I can guess.

    Is the nci valued on a proportionate basis? In which case, no goodwill is attributable to them

    But if goodwill WERE attributable to them, how much would it be

    I’m guessing that it’s 20% where the parent’s goodwill is 80%

    So notional goodwill for the nci is one quarter of the parent’s share of goodwill (20%/80%)

    There is an article about this by the examiner some 2 years ago (from memory) but I fail to appreciate properly the points that the examiner is making. For example he has the cost of a 60% acquisition by the parent as say $300,000 and the value of the remaining 40% held by nci as say $350,000

    This scenario is irreconcilable in my mind – that a 40% holding should be valued at greater than the cost of 60%!

    For that reason I have pretty much discounted the scenario as improbable.

    Fortunately the situation rarely appears in the exam given that most (if not all) ncis are valued on a fair value basis

    Does that answer it or am I barking up the wrong tree?

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