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Hello Sir,
I thought I understood goodwill but I cant get the right answer when working out this question, can you point out where I am going wrong?
Company A purchased 80% of Company B for $1,200,000. At the date of acquisition the book value of the net assets of Company B were $960,000 and the fair value of the net assets of Company B were $1,115,000. The fair value of the non-controlling interest at the date of acquisition was $300,000.
Calculate the goodwill on acquisition.
the answer options are £85K, 540K, 608K or 385K?
I did:-
consideration: 1,200,000
plus FV of NCI :300,000
Less FV of NA at acquisition:
n/assets (1,115,000 – 960,000)= (155,000)
Totals- 1,345,000?/??The fair value of the assets at the date of acquisition is 1,115,000.
(not 155,000 🙂 )Thank you Mr Moffatt, this was so plain to see but yet i was calculating, i get it now.. I was complicating things. Thank you Sir!!
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