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Dear lecturer,
In relation to question 1) a) of the September 2018 exam. We recalculated goodwill using the FV method. I understand this goodwill (14m) using this method belongs to the Parent and the NCI. Why did we add back the same % that we used when calculating goodwill under the proportionate method yet goodwill from the proportionate method belongs only to parent and good will using FV belongs to both parent and NCI.
I understand this is not required but I’m now slightly confused by this.
Thanks
Hi,
You can just deduct 80% of the net assets using the proportionate method, or add 20% NCI and then deduct the 100% net assets. They will give you the same answer. The key is that even under the proportionate method there is still NCI, the difference in the answers is how it is measured.
Thanks
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