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Step Acquisitions or Step disposals, Example

Forums › Ask CIMA Tutor Forums › Ask CIMA F2 Tutor Forums › Step Acquisitions or Step disposals, Example

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by P2-D2.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • December 11, 2017 at 2:10 pm #422540
    sharadkapoor
    Member
    • Topics: 12
    • Replies: 0
    • ☆

    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?

    December 16, 2017 at 10:05 pm #423764
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7163
    • ☆☆☆☆☆

    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

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