Mini exercises goodwill q8 page 215

Because the figures given in the question wee the results for the year and they included the loan interest. But that loan interest was specifically paid on a loan that only existed for the second half of the year. So, get back to pre-loan intest position (21,000 + 2,000) 23,000 Split into two six month periods = 11,500 pre- and post-acquisition. Now deduct the loan intest from the appropriate half year = 9,500 profits in the second half and 11,500 as at date of acquisition Ok now?

That makes sense, however there is no mention of a loan in the question I have infront of me! Never the less the method makes sense I will remember this method if I see it again Cheers Hugh

Hi I've done it again :-(. The subsidiary was acquired part way through the year and immediately after acquisition the parent invested in a loan note issued by the subsidiary ($50,000 8% loan) The question is a straight lift from December 2009 question 1

Thats brilliant thanks

You're welcome