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Why is entire goodwill not taken into account for disposal of entity?

Forums › Ask CIMA Tutor Forums › Ask CIMA F2 Tutor Forums › Why is entire goodwill not taken into account for disposal of entity?

  • 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
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  • June 28, 2017 at 3:04 pm #394274
    sharadkapoor
    Member
    • Topics: 12
    • Replies: 0
    • ☆

    Dear Sir,

    In the chapter Disposal of Subsidiaries, why do we take only the parent’s share of goodwill to account for the group profit or loss?
    We add the full NCI, so why don’t we deduct the full goodwill too, in order to arrive at the “Group Profit or Loss on disposal”?

    Regards and thanks for the constant support,
    Sharad

    July 10, 2017 at 10:44 am #395165
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7163
    • ☆☆☆☆☆

    Hi,

    The example assumes that we have calculated the goodwill using the full goodwill method, given we’re given the fair value of the goodwill at the acquisition date. If this is the case then we are deducting the full goodwill in the subsidiary.

    If the goodwill was calculated using the partial goodwill method then we would need to adjust the goodwill to gross it up to the full goodwill in the calculation.

    Thanks and glad to be of support.

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