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P Co has owned 75 % of shares of S Co SINCE incorporation of that company .During the year 31 December 2015 , S sold goods costing $16 000 to P Co at a price of $ 20 000
and these Goods were still unsold by P Co at the end of the year.Non Current Asset
Investment 75 000 shares in S Co at cost $75 000Equities and Liabilities
Equity
Ordinary shares of $ 1 each fully paid P Co $ 80 000 S Co $100 000
Retained Earnings $ 150 000 $ 60 000Prepared the consolidated statement of financial position of P Co at 31 December 2015.
It is the group policy to value the non-controlling interest at its proportionate shares of the subsidiary’s net assetworking :
Consideration transferred $75 000
Less : Group share of net asset’s ,
Ordinary Shares (75% x $100 000 = $75 000
Retained Earning (pre) = N/A
($75 000)
Goodwil noneMy question now it is possible that company could has none for Goodwill
It is because P Co owned 75% since incorporation of that company which gave us none for Goodwill. I just want to understand the different we Acquired during the year and start incorporate .That is substantially correct, yes
I suppose that it could be possible to pay ON INCORPORATION and amount in excess of the nominal share value – in your scenario above it could be a possibility that P paid, say, $90,000 when P acquired the 75,000 $1 equity shares on incorporation
But it would seem to be unusual
So, yes, where an investment is acquired on incorporation, it’s unlikely that there will be any goodwill
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