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Hi,
Anyone can help me? If the question didnt mention Fair Value of NCI and we are required to use full goodwill method? How do i calculate fair value of NCI? I’m confusing…
For example, A acquired 80% of B on 1/1/09 for $100m. Fair value of net assets of B were $39m.
You should calculate the goodwill by the old method (using Net assets share) if FV of NCI is not given because both methods are now allowed.
But as far as I understood in the question on exam it will be stated somehow the way of goodwill calculation.
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The FV of NCI for full goodwill method will be given in the exams.
In your example its possible to calculate FV of NCI using % of NCI and FV of Net Assets. But this method is called Proportinate, Net Godwill or Partial Goodwill.
FV of Consideration 80% 100
FV of NCI 20% 7.8 (20% x 39)
FV of Business 100% 107.8
FV of NA (39)
Goodwill at Acq 68.8Look at the course notes for F7 to see the various ways in which nci goodwill can be calculated
If parent acquired 100% of subsidiaries then how can we find FV of NCI
for example: Pco acquired 100% of the share capital of Sco on 1 September 2005 for $144,000, on which day the retained earnings of Beta were $34,560 and the fair value of the non-current assets was $36,000 more than their carrying value.
Salama there is no NCI for 100% owned Subsidiary. That sounds like you are doing a question from the BPP Textbook, it will have the answer you need. But there can be no minority interest if the company holds 100% of the shares.
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BS date (SC+RE+OCE+other adjustment)*NCI%+NCI goodwill
Hi, can you please help me to find goodwill for this question,
Jolly acquired 90% of the share capital of Roger on 1 January 2010 for $51,840. Roger was incorporated on that date.On 31 December 2012 the company’s Statements of Financial Position were as follows:
Jolly Roger
Non-currentassets $168,000 $ 86,400
Investment in Roger at cost$51,840
Current assets $64,800 $36,000
Share capital – $1 shares $148,800 $57,600
Retained earnings $107,040 $46,800
Current liabilities $28,800 $18,000
What amount should appear for goodwill in the consolidated statement of financial position?
Zero,
$51,840
$46,800
$57,600Salama,
The formula for calculation of goodwill is:
consideration + NCI – FV of net assets = goodwillHere you have:
* consideration = 51.840 (the amount paid by Jolly)
* FV of net assets = share capital + RE at the date of acquisition. Here at the date of acquisition Roger was incorporated, so the RE were 0 at that date, but the share capital was the same as it is now, ie 57.600
* NCI – as there is no FV of NCI given you calculate is as a % of the FV of net assets; so it will be 10% * 57.600 = 5.760So we have: 51.840 + 5.760 – 57.600 = 0
There you go 🙂Salama, are you really a P2 student?
The questions you are asking would embarrass an F7 student and would not be far beyond the capacities of an F3 student!
I am F3 student, actually I ask this question because one of my friend argue me with this question. And Thanx all for your kind help.
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