03-02-2010, 02:56 PM
Goodwill under full goodwill method
at 1st january retained earning was 0 and NCI share was 12000
Now fair value of net assets with 0 retained earning of business S was 65000, by calculating goodwill under full goodwill method
Consideration paid by company H 50000
Add fair value of minority interest 12000
Less 100% of the fair value of the net assets of the subsidiary acquired 65000
So (50000+12000-65000) is -3000 under full goodwill method
under partial goodwill such is
considereation paid by company H 50000
Less fair value of S 65000
Add NCI (20% of 65000)13000
So (50000-65000+13000) -2000
Or consideration paid 50000
Less parent share of subsidiary acquired's assets (80% if 65000)52000
By using full goodwill method leaving negative goodwill of 3000 out of which NCI's portion of negative goodwill 1000
Second step
H&S CONSOLIDATED BALANCE SHEET
ASSETS
Pep (100000+80000) 180000
Current assets (60000+30000) 90000
<b>TOTAL 270000</b>
CAPITAL/LAIBILITES
Share capital 120000
Retained earning (50000+30000+3000)83000
Current liabilities (40000+15000)55000
Minority interest (NCI) 12000
<b>TOTAL 270000</b>
Retained earning includes both parentâs acquired part of negative goodwill and NCI part of negative goodwill of 3000
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by mrafaykhan</i>
<br />Dear,
Your reply is correct in the context of proportionate goodwill method...I know the treatment but my question is that if your are using full goodwill method and then negative goodwill of minority arise then what will be the treatment...ok for more ease, let take an example
Statement of Financial Position as at December 31, 2010
ASSETS H S
PPE 100,000 80,000
Investment in S 50,000 -
Current assets 60,000 30,000
------- -------
210,000 110,000
======= =======
EQUITY + LIABILITIES
Share Capital 120,000 65,000
Retained earning 50,000 30,000
Current Liabilities 40,000 15,000
------- -------
210,000 110,000
======= =======
H acquire 80% shares of S Ltd at January 1st, 2010. Retained earning at that date was zero and fair value of NCI share was Rs. 12,000.
Now using full goodwill method prepare statement of financial position as at 31st December, 2010.
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
at 1st january retained earning was 0 and NCI share was 12000
Now fair value of net assets with 0 retained earning of business S was 65000, by calculating goodwill under full goodwill method
Consideration paid by company H 50000
Add fair value of minority interest 12000
Less 100% of the fair value of the net assets of the subsidiary acquired 65000
So (50000+12000-65000) is -3000 under full goodwill method
under partial goodwill such is
considereation paid by company H 50000
Less fair value of S 65000
Add NCI (20% of 65000)13000
So (50000-65000+13000) -2000
Or consideration paid 50000
Less parent share of subsidiary acquired's assets (80% if 65000)52000
By using full goodwill method leaving negative goodwill of 3000 out of which NCI's portion of negative goodwill 1000
Second step
H&S CONSOLIDATED BALANCE SHEET
ASSETS
Pep (100000+80000) 180000
Current assets (60000+30000) 90000
<b>TOTAL 270000</b>
CAPITAL/LAIBILITES
Share capital 120000
Retained earning (50000+30000+3000)83000
Current liabilities (40000+15000)55000
Minority interest (NCI) 12000
<b>TOTAL 270000</b>
Retained earning includes both parentâs acquired part of negative goodwill and NCI part of negative goodwill of 3000
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by mrafaykhan</i>
<br />Dear,
Your reply is correct in the context of proportionate goodwill method...I know the treatment but my question is that if your are using full goodwill method and then negative goodwill of minority arise then what will be the treatment...ok for more ease, let take an example
Statement of Financial Position as at December 31, 2010
ASSETS H S
PPE 100,000 80,000
Investment in S 50,000 -
Current assets 60,000 30,000
------- -------
210,000 110,000
======= =======
EQUITY + LIABILITIES
Share Capital 120,000 65,000
Retained earning 50,000 30,000
Current Liabilities 40,000 15,000
------- -------
210,000 110,000
======= =======
H acquire 80% shares of S Ltd at January 1st, 2010. Retained earning at that date was zero and fair value of NCI share was Rs. 12,000.
Now using full goodwill method prepare statement of financial position as at 31st December, 2010.
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
