On 15 June 20x2, P2 Ltd paid $1,600,000 cash to acquire 70% of ordinary shares of...

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On 15 June 20x2, P2 Ltd paid $1,600,000 cash to acquire 70% of ordinary shares of S2 Ltd. At acquisition date, the book value of net assets of S2 Ltd was $1,600,000 and the fair value of identifiable net assets was $1,900,000. The fair value of non-controlling interests was determined to be $650,000 as at acquisition date. Assume a tax rate of 20%. Required: Discuss the two possible bases for measuring non-controlling interests (NCI) at acquisition date and calculate the goodwill attributable to P2 Ltd and NCI under both bases. On 15 June 20x2, P2 Ltd paid $1,600,000 cash to acquire 70% of ordinary shares of S2 Ltd. At acquisition date, the book value of net assets of S2 Ltd was $1,600,000 and the fair value of identifiable net assets was $1,900,000. The fair value of non-controlling interests was determined to be $650,000 as at acquisition date. Assume a tax rate of 20%. Required: Discuss the two possible bases for measuring non-controlling interests (NCI) at acquisition date and calculate the goodwill attributable to P2 Ltd and NCI under both bases.

Answer rating: 100% (QA)

The two possible bases for measuring noncontrolling interests NCI at the acquisition date are 1 Proportional Approach Under this approach the NCI is m... View the full answer