ExpertEasy2 marksShort Answer
ACCA · Question 30 · Preparing Simple Consolidated Financial Statements
MediaGroup Co acquires 100% of the share capital of PrintWorks Ltd for $800,000. At the date of acquisition, the fair value of PrintWorks' net assets was $650,000. What is the value of goodwill arising on acquisition? (Enter numbers only)
MediaGroup Co acquires 100% of the share capital of PrintWorks Ltd for $800,000. At the date of acquisition, the fair value of PrintWorks' net assets was $650,000. What is the value of goodwill arising on acquisition? (Enter numbers only)
How to approach this question
Goodwill = Consideration transferred + NCI - Fair value of net assets acquired. Since it's a 100% acquisition, NCI is zero.
Full Answer
Goodwill = Consideration ($800,000) - Fair value of net assets acquired ($650,000) = $150,000. Because MediaGroup acquired 100%, there is no Non-Controlling Interest (NCI) to consider.
Common mistakes
Subtracting the consideration from the net assets, resulting in a negative number.
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