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HI all..can some one tell me why in June 2009 Question 1, the group share i.e. 80% is not used in the calculation of the goodwill (working 2).
I am fine with the rest of the goodwill calculation in this question but I don’t understand why they do not multiply by the Group Share????Also, in the calculation for ‘Investment in Associate’ (working 3), for the share of post acquisition profit, where do the figures (100-20) come from???
Also, the ‘Non Controlling Interest’ calculation (working 5), where is the figure for the share of adjusted post acquisition profit coming from i.e. (130 ).
Sorry if they seem like stupid questions but I’m really confused on this question.
Thanks 🙂Group share goodwill – The total consideration paid at the start of the calculation includes the non controlling interest of $65m – the controlling interest (in other words, the group share) and the non-controlling interest together make up 100% of the interest in the company, therefore the goodwill is calculated on a 100% basis.
Alternative workings that did not include the minority interest (and then split down the net assets by 80%) would give you a goodwill calculation of $20m entirely attributable to the group.Investment in associate – read note (vii) of the scenario – $20m is pre acquisition profit.
Working 5 – Look above at working 4, the line that says ‘adjusted post acquisition profits’ = 130
Hope this helps
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Why the share premium increase by 75m x 0.60. Where the 60c come from?
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Share Capital: 75m shares x $1/share = $75 million
Share Premium: 75m shares x ($1,6 – $1) = $45 million
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thanks man
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