S has 10 million shares of Rs.1 each in issue. H acquired 80% of these shares...

 

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S has 10 million shares of Rs.1 each in issue. H acquired 80% of these shares at a price of Rs.11.6 million when the net assets of S were Rs.10 million. Prior to the acquisition, the shares of S had been trading in the stock market at Rs.1.20 per share. Suppose that subsequently goodwill is impaired in value by Rs.1.5 million, so that it is now valued at just Rs. 2,500,000. The impairment in the goodwill must be attributed to the parent company and the NCI in the according to the proportions used to allocate profit or loss (80:20). Goodwill Purchase consideration Non-controlling interest (2m shares @ Rs.1.2) Fair value of net assets of subsidiary at acquisition Goodwill Impairment of goodwill: Total Rs.000 11,600 2,400 14,000 (10,000) 4,000 (1,500) 2,500 Parent Rs.000 11,600 (8,000) 3,600 (1,200) 2,400 NCI Rs.000 2,400 (2,000) 400 (300) 100 Note that the impairment is allocated 80:20 not 3,600:400 which might have been expected. S has 10 million shares of Rs.1 each in issue. H acquired 80% of these shares at a price of Rs.11.6 million when the net assets of S were Rs.10 million. Prior to the acquisition, the shares of S had been trading in the stock market at Rs.1.20 per share. Suppose that subsequently goodwill is impaired in value by Rs.1.5 million, so that it is now valued at just Rs. 2,500,000. The impairment in the goodwill must be attributed to the parent company and the NCI in the according to the proportions used to allocate profit or loss (80:20). Goodwill Purchase consideration Non-controlling interest (2m shares @ Rs.1.2) Fair value of net assets of subsidiary at acquisition Goodwill Impairment of goodwill: Total Rs.000 11,600 2,400 14,000 (10,000) 4,000 (1,500) 2,500 Parent Rs.000 11,600 (8,000) 3,600 (1,200) 2,400 NCI Rs.000 2,400 (2,000) 400 (300) 100 Note that the impairment is allocated 80:20 not 3,600:400 which might have been expected.

Answer rating: 100% (QA)

calculation of Goodwill purchase Consideration of a Non Controlling i... View the full answer