DFS Goodwill and Minority Interest
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lucy1988
Registered Posts: 74 Regular contributor ⭐
HI,
I am getting really confused with working out good will and Minority interest. If they dont give you the % of good will how do you work this out?
I have been practising dec 08 paper and for task 1.3 i got the goodwill % as 66.66% not sure if this is correct and then when i come to work out the minority interest i cant seem to get the answer in the question.
PLease can anyone help me?
Thanks
Lucy
I am getting really confused with working out good will and Minority interest. If they dont give you the % of good will how do you work this out?
I have been practising dec 08 paper and for task 1.3 i got the goodwill % as 66.66% not sure if this is correct and then when i come to work out the minority interest i cant seem to get the answer in the question.
PLease can anyone help me?
Thanks
Lucy
0
Comments

This was a confusion for most students. You need to turn the 66.67% into a fraction of 2/3rds which will then give you the right answer.
Regards
Steve0 
OK thanks for getting back to me.
How do you work out the Minority interest of £11280?
Thanks0 
The way the answer works is quite confusing but a net assets table is the best way to work it (see the model answer).
Basically we have worked out that the parent owns 2/3 so the minority interest must own the remaining 1/3, so the minority interests own:
Share capital (8,000 x 1/3) = 4,000
Share prem (6,000 x 1/3) = 2,000
Revaluation (4,500 x 1/3) = 1,500
Sub total...........................7,500
With the reserves this is where it gets tricky. The retained earnings balance in the subsidiary is $11,340. However at the acquisition date the retained earnings were $9,750 (per the notes to the question). The difference of ($11,340  $9,750) is the POST acquisition profits of $1,590. Of this $1,590 2/3 belongs to the parent ($1,060) the remainder to the minority interest ($530). The balance of the reserves AT acquisition of $9,750 means that 2/3 belongs to the parent ($6,500) and the remaining $3,250 belongs to the minority interest, so:
Sub total b/f.................7,500
Share of post acq profit.....530
Share of pre acq profit....3,250
To minority interests.....11,280
I hope that helps you.
Regard
Steve0 
Yes i understand now...thank you.0
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