I- Net asset approach The consolidation process is the same as those in Example 1.5 except that NCI's share in the net assets of Q Ltd needs to be accounted for. Example 1.7 The consolidation journal entry at acquisition date would be: Eliminate investment cost in Q Ltd and determine goodwill at acquisition date. Dr. Share capital of Q Ltd 100,000 Dr. Retained profits of Q Ltd 70,000 Dr. Goodwill at acquisition 64,000 Cr. Investment in Q Ltd Cr. NCI ($170,000 × 20%) I- Net Asset approach The consolidation journal entry at acquisition date would be: Dr. Share capital of Q Ltd Dr. Retained profits of Q Ltd Dr. Goodwill at acquisition Cr. Investment in Q Ltd Cr. NCI ($170,000 x 20%) at acquisition date 100,000 70,000 64,000 200,000 34,000 Eliminate investment cost in Q Ltd and determine goodwill The consolidation worksheet Consolidation Adjustments P Ltd Q Ltd Dr. $000 $000 $000 Cr. $000 Group $000 Non-current assets Investment in Q Ltd 700 120 820 200 200 Goodwill at acquisition 64 64 Net current assets 300 1,200 Share capital Retained profits NCI 500 700 1,200 ig ཎྜe S 50 350 170 1,234 100 100 500 70 700 34 34 170 1,234 200,000 34,000

I- Net asset approach The consolidation process is the same as those in Example 1.5 except that NCI's share in the net assets of Q Ltd needs to be accounted for. Example 1.7 The consolidation journal entry at acquisition date would be: Eliminate investment cost in Q Ltd and determine goodwill at acquisition date. Dr. Share capital of Q Ltd 100,000 Dr. Retained profits of Q Ltd 70,000 Dr. Goodwill at acquisition 64,000 Cr. Investment in Q Ltd Cr. NCI ($170,000 × 20%) I- Net Asset approach The consolidation journal entry at acquisition date would be: Dr. Share capital of Q Ltd Dr. Retained profits of Q Ltd Dr. Goodwill at acquisition Cr. Investment in Q Ltd Cr. NCI ($170,000 x 20%) at acquisition date 100,000 70,000 64,000 200,000 34,000 Eliminate investment cost in Q Ltd and determine goodwill The consolidation worksheet Consolidation Adjustments P Ltd Q Ltd Dr. $000 $000 $000 Cr. $000 Group $000 Non-current assets Investment in Q Ltd 700 120 820 200 200 Goodwill at acquisition 64 64 Net current assets 300 1,200 Share capital Retained profits NCI 500 700 1,200 ig ཎྜe S 50 350 170 1,234 100 100 500 70 700 34 34 170 1,234 200,000 34,000

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter12: Intangibles

Section: Chapter Questions

Problem 9MC

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BUSINESS COMBINATION Answer it with solution:
Calculate the goodwill on consolidation from the information below: Parent’s cost of investment in subsidiary 299,700 Net asset at acquisition date (parent) 986,600 Net asset at acquisition date (subsidiary) 345,800 Fair value of non-controlling interest at acquisition date 169,500 Net asset at reporting date (subsidiary) 316,400 Parent has 80% interest in subsidiary Impairment of goodwill 62,200
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