Step Acquisitions or Step disposals, Example

SKSharad Kapoor8y ago

Hi Sir, May I know why we have to add goodwill to net assets? As we know, assets = liabilities + equity. Therefore, if we take the "equity" figure as "net assets", this already includes the fact that assets - liabilities = equity, wherein the "assets" include the intangible asset of goodwill. Why are we double counting goodwill by adding it again?

P2-D2Tutor8y ago#1

Hi, The assets figure is taken from the books of the subsidiary and the sub's books do not show the goodwill as it is a consolidation adjustment. To therefore get the total value of S's assets we need to add in the goodwill. Thanks

Sign into reply to this topic.