Financial Statements 2010 practice assessment 2 - help

mupp
mupp Registered Posts: 12 Regular contributor ⭐
Hi,

I need some help please. I am going through 2010 practice assessment two and am a bit stuck.
It relates to consolidated statement Q 1.5

There is a note: At 1st January the fair value of the non current assets of the subsidiary was £800 more than the net book value. This revaluation has not been recorded in the books of the subsidiary.
Parent company has 80%
How is this treated in respect of goodwill (revaluation reserve attributable to the parent company) and in respect of non controlling interes for sub. I understand that 640 relates to parent and 160 to the sub, but what i dont understand is why they are taking 640 of the goodwill calculation. and add 160 on for the non controlling interest.


help is much appreciated! Thank you

Comments

  • kkelly
    kkelly Registered Posts: 51 Epic contributor 🐘
    Hi mupp,
    The goodwill calculation is based on the fair value of the assets acquired. If the 640 was not taken off the goodwill calculation then goodwill would be overstated. The fair value adjustment of £800 is apportioned 80/20 as 20% belongs to the NCI and so is added in to the non-controlling interest figure for consolidation.

    Hope this helps!!
    Kevin
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