Question from mock exam Goodwill

Jjoseph8911y ago

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 $ 3.15 Answer is $ 431,777 Can someone tell me how it was calculated?

MikeLittleTutor11y ago#1

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?

Jjoseph8911y ago#2

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?" :D

MikeLittleTutor11y ago#3

I don't believe that there is anything wrong! What possible importance is the information that the balance brought forward on the current tax account results from an over / under provision from last year? Who cares?