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Please help me to answer the goodwill question in section B Q1 in the mock at Open tuition here. I have tried my hands on using the Goodwill formula but still can’t get the answer (71000) given. Somebody help me
Cost of Alice’s 90% is 85,000; Fair value of NCI at date of acquisition is 10,000.
Total is 95,000.Net assets at date of acquisition = share capital + reserves = 12,000 + 12,000 (pre-acquisition retained earnings) = 24,000
Therefore goodwill arising on consolidation = 95,000 – 24,000 = 71,000
(Our free lectures on consolidations may help you)
Thank you so much John. Got it now, I was missing the 85000 which is Alice invested.
Much Appreciated
Hi John,
Please I need your help again. I wrote F3 last Wednesday but I sadly narrowly failed to get the pass mark.
I have not seen an example of the Consolidation account question I got. The shares the parent had acquired was not given in percentage. The number of shares the available to the subsidiary at the time of acquisition was given and the retaining amount too. The investment of the parent was given in the report. The non-controlling interest at the time acquisition was also not given but the price of per share was given and was asked to use that figure to controlling interest. After that the normal consolidation accounts preparation questions were asked an finally was asked to find the adjusting value. I found this question quite for me since I have seen any example like that. Please explain to me how to about this kind of question an if you have any example, please show me and how to solve it. Thanks
hoping to hear from you.I am sorry that you did not pass the exam.
It is difficult for me to help specifically without seeing the full question.
However, if the % owned by the parent (or % held by the NCI) were not given as %’ages then instead the question must have told the number of shares in which case you would be able to calculate the %’s yourself.The question told the number of shares held by the subsidiary and gave the Investment by the parent in the subsidiary in the financial position statement. It also gave the value per share in the question. Can I calculate the percentage breakdown between the parent and subsidiary using these values?
Yes. If you know how much the parent paid and you know the value per share, then the number of shares help by the parent in one divided by the other.
Since you know how many shares there are in the subsidiary, then you can calculate the percentages.
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