Home › Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA Strategic Business Reporting (SBR) Exams › Question 61 Leigh (BPP KIT)
- June 21, 2020 at 6:44 am
In Part (c) Answer: Add back negative goodwill:(2.5 + (9×70% ‘NCI’)– 9)
Could you please explain why the negative goodwill has been added back to the cost of investment and it’s calculation?
Thank sirJune 21, 2020 at 10:58 am
Cost 1 x 2.5 = 2.5
Share of net assets 30% x 9 = 2.7
Negative goodwill = 0.2
Logic (from IAS plus)
Implicit goodwill and fair value adjustments. On acquisition of the investment in an associate, any difference (whether positive or negative) between the cost of acquisition and the investor’s share of the fair values of the net identifiable assets of the associate is accounted for like goodwill in accordance with IFRS 3 Business Combinations. Appropriate adjustments to the investor’s share of the profits or losses after acquisition are made to account for additional depreciation or amortisation of the associate’s depreciable or amortisable assets based on the excess of their fair values over their carrying amounts at the time the investment was acquired. [IAS 28.23]
Last examined (I think) 2007
Status – prizewinner!
You must be logged in to reply to this topic.