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Hello
In the following, I do not understand how the gain of 4 was arrived at.
On 1 January 2008, A acquired a 50% interest in B for $60m. A already held a 20% interest which had been acquired for $20m but which was valued at $24m at 1 January 2008. The fair value of the NCI at 1 January 2008 was $40m, and the fair value of the identifiable net assets of B was $110m. The goodwill calculation would be as follows, using the full goodwill method:
$m $m
1 January 2008 consideration 60
Fair value of
interest held 24
84
NCI 40
124
Fair value of identifiable net assets (110)
Goodwill 14A gain of $4m would be recorded on the increase in the value of the previous holding in B.
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