In example 7, how did we get the good will of disposing subsidiary?
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Example 7 (GoodWill)
Cost $350,000
75% x (300,000 $1 shares + $150,000 retained earnings) = $337,500
Goodwill $12,500
The fuller version:
Cost $350,000
NCI $112,500 (proportional share of net assets at date of acquisition)
Total worth of the entity $462,500
Fair valued net assets at date of acquisition:
Shares $300,000
Retained earnings $150,000
Therefore Goodwill is $12,500
OK?
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