I am working through the following question:-
Parrot had disposed of its 80% holding in Cockatoo Cos 20m $1 shares
For $21.6m
At disposal FV of net assets was $3.5m and unimpaired goodwill $0.5m
Parrot Co measures nci at FV of net assets.
What is profit on disposal?
The answer is deducting goodwill from proceeds - but the BPP text proforma is to add back goodwill at disposal. I am now confused - can someone explain.
Thanks
proceeds $21.6
goodwill -0.5
Shares 20.0
retained earnings 3.5
total -23.5
nci 4.7
Profit on disposal 2.3
Ask the Tutor ACCA FR
Disposal of Subsidiary
6y ago#1Hi,
The calculation is as follows:
Proceeds 21.6
Less 80% x net assets (80% x [3.5 + 0.5]) 3.2
Profit 18.4
Or you can calculate as follows:
Proceeds 21.6
Add NCI (20% x [3.5 + 0.5]) 0.8
Less Net assets 4
Profit 18.4
Hope that makes some sense.
Thanks
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