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Proportionate share of net assets goodwill method - Query

AAvery5y ago
Dear Sir, Under the proportionate share of net assets goodwill method, NCI is being valued at its proportionate % of net assets. So then, why is the resulting goodwill only the parent's goodwill? If you could kindly explain, that would help me out a lot Is it because the NCI % share of goodwill is being cancelled out by adding the share of net assets? Thank you sir
stephenwidbergstephenwidbergTutor5y ago#1
A buys 80% of B for 100. B's NA are 120. Goodwill (official calculation) COST 100 NCI (20% x 120) 24 Less NA (120) GOODWILL 4 Now an unofficial calculation: COST 100 Less %NA ((80% x 120) (96) GOODWILL 4 Can you see that in prop. goodwill I am effectively comparing the cost to the parent with the share of net assets acquired by parent? So it is goodwill ONLY on parent's investment in sub.
AAvery5y ago#2
Thank you so much sir for making it so simple :-) Highly appreciate it
stephenwidbergstephenwidbergTutor5y ago#3
My pleasure
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