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Calculate the figure for goodwill in this scenario.
The aggregate cost of the investment to the parent(P) was $5,250,000
The carrying value of the new subsidiary’s (S) assets was $7,012,400
The directors of P have valued the NCI on a proportional basis.
P acquired 65% of the S shares
The S asset of land had a fair value $400,250 in excess of its carrying value
The market value of the S shares immediately before the acquisition by P was $ 3.15Answer is $ 431,777
Can someone tell me how it was calculated?
Cost of investment $5,250,000
Value of nci 35% x FV of SNA @DOA ???FV of SNA @ DOA $7,412,650
So nci investment is 35% x $7,412,650 = $2,594,427
Total “worth” of subsidiary is $5,250,000 + $2,594,427 = $7,844,427
Compare with FV of SNA @ DOA = difference (goodwill) of $431,777
Ok?
Yes, I get it. Thank you very much.
P.S
I there something wrong with mock exams(on this site ). One question was about current tax and the correct answer was ticked as ” Who cares?” 😀
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