Please could someone help me on the following question. I have been going round in circles with it:
Its a test your understanding question from the ftc notes. (Chapter 7 page 223 Kathmandu)
Im struggling to understand how they get the answer for goodwill???
On 1st Jan 2005 Kathmandu acquired 70% of the shares of Nepal for 100,000dollars when fv of Nepals net assets were 120,000dollars. Nepal has equity capital of 50,000dollars. At this date, the fv value of goodwill attributable to the N-C-I WAS 2,000dollars. Goodwill is to be accounted for using the full method. No goodwill has been imapired.
Their working for goodwill in the asnwer was as follows:
Share of net assets acquired
(120,000 x 70%) 84,000
Goodwill Parents Share = 16,000
NCI Share in Goodwill (per Q) 2,000
Gross Goodwill 18,000
Why do we not need to minus from the nci figure the share of nci % of the net assets at aquisition????? as per the proforma workings i have seen in the previous chapters??
Any help would be greatly appreciated.