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Hi. I have 2 questions if anyone can help me please. Thanks
1. What if we get more than what we have paid in an acquisition of a subsidiary. What will be different in the consolidated SOFP? Will the NCI also get the share of the negative goodwill and where will it go in the SOFP?
2. Why do we deduct the additional depreciation from the profit after tax for the calculation of NCI share in the income statement when we have already done that by adding it in the cost of sales?1. Negative goodwill – fair values should be reconsidered at the first year end after acquisition and, if negative goodwill still arises having reviewed fair values, it should be credited to Income Statement
Nci do not get their share!
2. The deduction is in the working 4a which is a balance sheet working. Nci is entitled to their share of the Subsid’s net assets at balance sheet date. This is a straight forward calculation of nci %age x the Subsid’s net assets ( equity section total ) but needs to be adjusted for any adjustments made to the Subsid net assets – ie additional depreciation
@mikelittle said:
1. Negative goodwill – fair values should be reconsidered at the first year end after acquisition and, if negative goodwill still arises having reviewed fair values, it should be credited to Income StatementNci do not get their share!
Hi can pls give some example related to the adjustment ?Thanks v much
yes, something with a fair value of 200 has been reassessed at the year end to have a fair value of only 150. That will have the effect of reducing the negative goodwill. The correction would be in the consolidation workings, not in the subsid’s own fin stats ( probably )
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