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The subsidiary had inventory lower than its book value at the acquisition date by $ 10m. It was sold during the year
What I know is that this will increase my value of good will. Is there any other adjustments to make on post acquisition profits of the subsidiary?
If you were to have to calculate the figure for cost of sales, then it would affect that calculation
If it’s a mid-year acquisition (clearly it IS) and you’re having to time apportion the year’s profits, the overvaluation will have an affect on that calculation
Split on a “normal” time apportionment basis but then reduce pre-acquisition by $10 million and increase post-acquisition by $10 million
OK?
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