SBRnote : Chapter 1 Example 1

This is to work out Goodwill so you're trying to find the company value AT acquisition.

Annual profit of £24k less the internal £20k TNCA = £4k for the year (to the group)

This profit of £4k needs to be split to see which bit relates to the pre-acquisition (10months over the 12 months)
Getting the £3333

Some of the inventory was worth £16k more than valued at acquisition.
So there is £16k more value in the company at acquisition.

Hence £3333 and the £16k = £19,333 current value this year compared to their figures.

That's how I am understanding the answer (Had to read it a few times)

Thank you very much, Egrek. I did not realise that the profit for the year $24 include the intra-group sale of PPE before. Now I see it.

:) I only noticed it on the 2nd read.

But then I thought that was the bit you were happy with, so had ignored it the first time around!