Consolidated balance sheet

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:08AM in AAT student discussion
Could somebody explain how to calculate goodwill? <BR><BR>i have been looking through some past papers for DFS and it seems that the way i have been taught to calculate it is different to the suggested answer in the exam <BR><BR>I am very confused!!!!!

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    Consolidated balance sheet

    This is the way I understand it:<BR><BR>To calculate goodwill you take the balance of the subsidiaries net assets at the acquisition date and multiply that number by the % of the subsidairy that the parent owns.<BR>eg <BR>A owns 75% of B<BR>Net current assets at acquisition = 2000<BR>2000x75%=1500<BR><BR>You then need to find out how long the company has owned the subsidiary and how many years the goodwill is amortised over, and then calculate how much goodwill is to be written off.<BR><BR>eg A has owned B for 1 year<BR>Goodwill is amortised over 15 years<BR>Goodwill= 1500x1/15=100<BR><BR>The amount written off is then deducted from the goodwill calculated previously<BR><BR>eg.<BR>Goodwill 1500<BR>Goodwill w/off (100)<BR>Goodwill 1400 - this amount is then added onto the balance sheet under intangible fixed assets.<BR><BR>Hope this helps.<BR>Michelle<BR>
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Consolidated balance sheet

    That clears things up <BR><BR>Thanks x
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Consolidated balance sheet

    this is rediculous, this way sounds so easy I usually do it the way with the little table with share capital etc. let me ask if there is consideration how do you treat that
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Consolidated balance sheet

    I am trying to to june 2003 paper with the method and it is not adding up could you help thanks

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