FV of SNA @ doa

On 1 May 2007 karl bought 60% of Susan paying $76,000 cash.The financial position for the two companies as at 30 November 2007 are

Karl Susan
Share capital $50,000 $40,000
RE $189,000 $69,000

Karl group values the NCI using the fair value method .A the date of acquisition the fair value of the 40% nci was $50,000

The impairment loss of $1000 is to be charged against goodwill at year end.

Susan earned a profit of $9,000 in the year ended 30 November 2007.

Sir, i could not get the goodwill using different method and i would i prefer your method more because it more helpful

Consideration = 76,000
nci value =50,000
total = $126,000

fv of SNA @ DOA
share capital 40,000
bf 69,000
net asset 5/12*9000=3750

goodwill = 126,000 – 112750 = $13250
impairment $1000
carrying goodwill=$12250

Kaplan:

Share capital 40,000
RE @ acq’n balance ??
Post acq profit 7/12*9000= $5,250
RE @ reporting date = $69,000
therefore RE @ acq balance = $63,750
net asset total = 40,000 + 63750 = 103,750
Goodwill $22,250 ( 126,000- 103,750)
impairment $1,000
carrying goodwill $21,250(22,250-1000)

I hope you see what i mean because the brought forward figure of $63,750 which was the net asset(RE) at the date of acquisition.

What i think your method is , it is to first deduct the figure of the subsidiary for the year ie the 9000 from the RE @ reporting date which is 69,000-9000= b/f figure of 60,000
then net asset of the 5 months which 5/12*9000= $3750
total RE ( Net asset ) = 60,000 + 3750= 63,750
40,000+63750=$103,750
goodwill= 126,000-103,750=22,250-$1000 impairment = Carrying goodwill of $21,250.