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Can you explain to me how to deal with evaluation surplus in consolidated financial statement where should i include it ? should be included in calculation of goodwill ?
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Teo Co acquired 95% of the ordinary share capital of Mat Co 31 December 20X0. The following information relates to Mat Co:20X0
Retained earnings 700
Revaluation surplus –
20×1
Retained earnings 800
Revaluation surplus 100The fair value of the non-controlling interest in Mat Co at the date of acquisition was $45,000. What is the amount reported for non-controlling interest in the statement of financial position of the Teo Group as at 31 December 20X1?
the answer was 55
The revaluation surplus and the retained earnings are both reserves and are both treated in exactly the same way.
The amount pre-acquisition is included in the calculation of goodwill.The amount post-acquisition is use in the calculation of the NCI.
For the retained earnings, 100 is post-acquisition and for the revaluation surplus all 100 is post acquisition.
Therefore the NCI in the consolidated SOFP is 45 + 5% x (100 + 100) = 55.
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