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Dear Tutor,
I hope you are well. I am struggling to find out how the Goodwill and NCI has been calculated as there was no NCI at acquisition given for Club (Associate to Sub -step acquisition) in the question.
I would be grateful if you can show me how they’ve been calculation.
Many thanks.
The notes state that “The fair value of the original 40% holding and the fair value of the non-controlling interest should both be estimated using the market value of the shares.”
Therefore, you would have to calculate NCI using the share price of Club, which is given as $1.60.
FV of NCI at acquistion (as a subsidiary) = 15% (NCI %) x $700m (Share capital) x $1.60 (Share Price) = $168m.
Apply same principal to original holding to get fair value of original investment using the 40% acquired.
Hope this helps!
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