Financial Statements - Goodwill & Non-controlling interest

mrderek88

Hi

I can't get my head round goodwill. Can someone please help me out with the following question? This is when Distance Learning is difficult.

Goodwill
Wyvern invested £260,000 in 150,000 ordinary shares of £1 each in Sidbury Ltd. At the date of acquisition the equity of Sidbury Ltd comprised £200,000 in share capital and £120,000 in retained earnings.

I have the calculation as:
Cost of investment: £260,000
Value of subsidiary £320,000
(share capital + retained earnings)
Goodwill -£60,000

The correct answer is £20,000???

Thanks, Derek

Marco

(150000/200000)*100= 75% share of Wyvern
Cost of invest is £260000
75% of 200,000 share=150,000
75% of 120,000 retained = 90,000
Good will = 260,000-(150000+90000)= 20,000