FVINA 76000 Goodwill 12000 Attributable to Parent 4400 NCI 7600 12000 50000

Fvina 76000 goodwill 12000 attributable to parent

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FVINA 76,000 Goodwill 12,000 Attributable to: Parent 4,400 NCI 7,600 12,000 ($50,000 – ($76,000 * 60%)) ($38,000 – ($76,000 * 40%))
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Australian School of Business Accounting with NCI – full goodwill  method Pre-acquisition entry DR Share capital 24,000 DR General reserve 1,200 DR Retained earnings 12,000 DR BCVR 12,800 CR Investment in S Ltd 50,000 [(14,000X60%) + 4,400]
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Australian School of Business Accounting with NCI – full goodwill  method  NCI entry – Step 1 DR Share capital 16,000 DR General reserve 800 DR Retained earnings 8,000 DR BCVR 13,200 CR NCI 38,000 The CR to the NCI account is a balancing item [(14,000X40%) + 7,600] 40% of totals
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Australian School of Business Accounting with NCI – partial goodwill  method $ Cost of acquisition 50,000 Book value of net assets - Share capital 40,000 - General reserve 2,000 - Retained earnings 20,000 Total book value of net assets 62,000 Fair value adjustments - After tax increase in plant 14,000 Total fair value adjustments 14,000 FVINA 76,000 X %age acquired 60% 45,600 Goodwill on acquisition 4,400 Acquisition analysis
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Australian School of Business DR  Accum depreciation 70,000 CR  Plant – cost 50,000 CR DTL      6,000 CR  BCVR  14,000   (i) Revaluation of plant to fair value   DR Depreciation expense 4,000 DR Retained earnings 4,000 CR Accum depreciation 8,000 DR DTL 2,400 CR ITE   1,200 CR Retained earnings   1,200 (ii) Consequential depreciation adjustment for plant (including related  tax effect) Accounting with NCI – partial goodwill  method
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Australian School of Business DR Share capital 24,000 DR General reserve 1,200 DR Retained earnings 12,000 DRBCVR 8,400 DRGoodwill 4,400 CR Investment in S Ltd 50,000 (iii) Pre-acquisition elimination entry DRDividend revenue 6,000 CR Dividend paid 6,000 (iv) Elimination of intragroup dividend Accounting with NCI – partial goodwill  method Note that it is only the amount of the dividend received by the parent ($10,000 x 60%) that is  eliminated
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Australian School of Business DR Retained earnings 14,000 DR ITE 6,000 CR COGS 20,000 (v) Elimination of unrealised profit in opening inventory DR Share capital 16,000 DR General reserve 800 DR Retained earnings 8,000 DR BCVR 5,600 CR NCI 30,400 (vi) Allocation of pre-acquisition equity to NCI (STEP 1) Accounting with NCI – partial goodwill  method
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Australian School of Business NCI Step 2 allocation The purpose of this step in the NCI allocation process is to allocate a share of all movements in equity from the date of acquisition to the end of the previous reporting Accounting with NCI – partial goodwill  method
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Australian School of Business Opening retained earnings (30/6/11) 45,000 Less: pre-acquisition retained earnings (20,000) Post acquisition retained earnings 25,000 Depreciation expense on plant Unrealised profit in opening inventory (2,800) (14,000) Adjusted retained earnings 8,200 X NCI share @ 40% 3,280 NCI Step 2 allocation  The NCI share of opening post acquisition retained earnings is calculated as follows: Accounting with NCI – partial goodwill  method Jnl (ii) Jnl (v)
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