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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.
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.