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Hi sir,
I have doubt in this question where the answer is c ( increase 20000) why??
For me I selected answer d(decrease by 20000)
Bcz fv < bv = adj (-)
Dep (+)So in net assets at acstn column
I have -20000 figure but I don’t know I m right or wrong can you please explain me.
Hi,
The fair value adjustment is in relation to a LIABILITY. It is not in relation to your standard FV adjustment for an item of PPE. When the value of a liability is included at fair value then the net assets will decrease and so the goodwill will therefore increase as we are deducting a lower value of net assets following the FV adjustment.
Thanks
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