Goodwill at acquisition
LucySherwood
Registered Posts: 12
Hi, can anyone help I have done a practise question and my goodwill calculation is somehow out by 228, any help appreciated.
Parent invested £20,000 in subsidiary for 8,000 ordinary £1 shares. The parent has 80% control.
Share capital was 10,000, Retained earnings at acquisition was 6,400, share premium was 2,000 and there is a reevaluation surplus of 1,500 (total figure). Goodwill is impaired by 15%.
Non controlling interest is valued at the proportionate share of net assets
I have the calculation as below:
Consideration - 20,000
NCI - 3,740
Net assets acquired - -18,700
Impairment - 1,800
Total - 3,240
The actual answer is 3,468
Parent invested £20,000 in subsidiary for 8,000 ordinary £1 shares. The parent has 80% control.
Share capital was 10,000, Retained earnings at acquisition was 6,400, share premium was 2,000 and there is a reevaluation surplus of 1,500 (total figure). Goodwill is impaired by 15%.
Non controlling interest is valued at the proportionate share of net assets
I have the calculation as below:
Consideration - 20,000
NCI - 3,740
Net assets acquired - -18,700
Impairment - 1,800
Total - 3,240
The actual answer is 3,468
0
Comments
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Net assets = equity = 10,000 + 6,400 + 2,000 + 1,500 = 19,900
Goodwill at acquisition = 20,000 - (19,900 x 80%) = 4,080
Goodwill at end of period = 4,080 - 15% = £3,4681 -
Thank you so much! I didn’t realise to use the total figure for the reavaluation but now I see why it is that way.PeterC said:Net assets = equity = 10,000 + 6,400 + 2,000 + 1,500 = 19,900
Goodwill at acquisition = 20,000 - (19,900 x 80%) = 4,080
Goodwill at end of period = 4,080 - 15% = £3,468
0 -
You're welcome0
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