ACCA FR · Chapter 12 · Question 3 of 13
Using the same facts as the Puma Co acquisition (consideration $7,500,000, Saker Co net assets at fair value $7,200,000, 80% acquired), what would goodwill be if NCI were measured at its proportionate share of identifiable net assets?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) $1,740,000
Explanation
NCI at proportionate share = 20% x $7,200,000 = $1,440,000. Goodwill = $7,500,000 + $1,440,000 - $7,200,000 = $1,740,000. This equals the parent's goodwill only (consideration less 80% of net assets). It is lower than under the fair value method because no goodwill is attributed to the NCI.
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