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Explain the formular of calculating Goodwill

Forums › ACCA Forums › ACCA FA Financial Accounting Forums › Explain the formular of calculating Goodwill

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  • December 27, 2015 at 8:49 am #292776
    quangtuan
    Participant
    • Topics: 5
    • Replies: 5
    • ☆

    Hi everyone,
    I’m new to ACCA and studying F3.

    For calculating Goodwill, we have this formula :
    Good will = Consideration transfered + NCI fair value – Net assets recognized

    I don’t understand why we plus with NCI.
    Thank for your help!

    December 27, 2015 at 9:49 am #292785
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54665
    • ☆☆☆☆☆

    Consideration is what the parent company paid for their share of the subsidiary. Fair value of the NCI at the date of acquisition is the value of the remaining share. Add the two together and you have the total value of the subsidiary at the date of acquisition.

    I do suggest that you watch our free lectures – they are a complete free course for Paper F3 and cover everything needed to be able to pass the exam well.

    December 27, 2015 at 1:04 pm #292791
    quangtuan
    Participant
    • Topics: 5
    • Replies: 5
    • ☆

    Thanks alot for your advice!

    December 27, 2015 at 1:22 pm #292794
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54665
    • ☆☆☆☆☆

    You are welcome 🙂

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