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Hello Mike, I have two questions
1. In chapter 7, example 6 of the lecture note – Ivona and Guido, in W2 – Goodwill, how did establish that the share price was $1.65 each in your calculation of ‘value of NCI investment’?
2. Am I write to say that: no goodwill is attributable to subsidiary on two scenarios, (A) if goodwill was proportionally valued as in example 5 chapter 7; (B) if the acquisition was made on the date of the subsidiary’s incorporation?
Thanks for the lectures, its been of great value to my preparation for the exams.
Paula
I believe that you are confusing the answer to example 8 with the question for example 6 or example 7!
I believe that when you say “no goodwill is attributable to subsidiary ” you actually mean “no goodwill is attributable to the nci”
If that’s what you meant then, yes, with one small exception. If, and it’s unlikely, that the subsidiary was acquired on the date of incorporation but minutes after the company was formed and some of the original shareholders sold their shares on that same date for a profit, then conceivably there could be goodwill (so where the parent paid these original shareholders an amount greater than the nominal value there could be goodwill)
I’ve never seen it in an exam question!
OK?
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