Group Accounts & Goodwill

Question 1

Goodwill

Answer 1

FV Consideration X
NCI @ Acquisition X
FV of NA @ acq (x)

Goodwill X
Impairment (x)

Question 2

Proportionate method
Partial Goodwill method

Answer 2

NCI = % x FV of S’s NA

No Goodwill to NCI
No impairment to NCI

Gross up G/W, Gross down impairment

Question 3

Full Goodwill
Fair Value Method

Answer 3

NCI given or NCI share x share price
or % x PAT (earnings) x PE ratio

Goodwill to NCI
Impairment to NCI

Question 4

Bargain Purchase
Negative Goodwill

Answer 4

take Gain to income statement
Not negative asset

Question 5

Step Acquisition
No control to control

Answer 5

FV previously held interest X
FV of consideration for add interest X
NCI @ acqu X

Less: FV of NA @ acqu (x)

Goodwill @ acqu X

Question 6

Step disposal
Control to No control

Answer 6

Disposal proceeds X
FV of retained interest X

Less Interest in sub
NA of sub @ acqu X
Goodwill @ disposal X
Less CA of NCI @ disposal (x)
(x)

Profit/loss x/(x)

Question 7

Control to Control

Answer 7

Goodwill not recalc
Profit/loss does not arise

DR NCI X
CR Cash X
CR/DR Other components of equity (OCE) X