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Goodwill and share premium

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Goodwill and share premium

  • This topic has 1 reply, 2 voices, and was last updated 1 month ago by Stephen Widberg.
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  • Author
    Posts
  • December 25, 2022 at 9:10 am #675088
    aliabdulrasool
    Participant
    • Topics: 3
    • Replies: 3
    • ☆

    Hey Chris,

    Hope you are doing well.

    Assume the following scenario:

    Company XYZ currently owned 90% by shareholder “A” and 10% by shareholders “B”. Both of which are individual shareholders.

    During the period, the Company has issued new shares which have been bought entirely by Company “ABC” , this result in ABC owning 60%,Shareholder “A” 35%, and Shareholder “B” 5%

    Company ABC has paid a premium over the par value of these newly issued shares.

    My question is whether such premium will be accounted for as goodwill at the consolidated Financial statements of Company ABC or not.

    Thank you

    December 25, 2022 at 10:29 pm #675092
    Stephen Widberg
    Keymaster
    • Topics: 12
    • Replies: 2839
    • ☆☆☆☆☆

    In ABC group accounts any excess of the FV of the consideration over the FV of the NA acquired will be goodwill.

    Any par value is irrelevant.

    If you want to take this one further please refer me to the ACCA past exam question that you are looking at.

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