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Hello! This is not relavant to the solution of the question however I was really stuck by the fact that the consideration paid was 15m shares @1.2 each = 18m for 75% shareholding while NCI is 24m for 25%. How is this possible? Was it there anything additional paid that I didnt get? Thanks!
I don’t have access to the Q at the moment – but it sounds very odd. If you can summarise the relevant part of the Q, I’ll have a think.
I assume that the 18m is based on fair value of shares not the nominal value. (It should be fair value)
On1 January 20X6 Laudium purchased 30 million of the 40 million equity shares of Hennops and gained control of Hennops. Goodwill has been determined at $36 million but it now appears errors were made. The following information needs to be considered.
The purchase consideration was one equity share in Laudium(nominal value of $1) for every two shares acquired in Hennops. On 1 January 20X6 the fair value of an equity share in Laudiumwas $1.20. The issue of the shares had been recorded at their nominal value.Then there are number of correction to the FV of net assets which result in correct goodwill of 37.3m
The NCI at FV is given an it is said to be correct – 24m
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