ABC Group’s Consolidated Statement of Financial Position as at 1 January 2017 (Rs.’000) ABC XYZ Adjustments Group Non-Current Assets PPE
30,000
35,000
5,000 (A)
70,000
Investment
50,000
-
-50,000 (B)
-
Goodwill
8,750 (D)
8,750
Current Assets 45,000
35,000
80,000
Total Assets 125,000 70,000 158,750 Equity Ordinary Share Capital
80,000
40,000
-30,000 (B)-10,000 (C)
80,000
Retained Earnings
25,000
10,000
-7,500 (B)-2,500 (C)
25,000
Fair value adjustment
5,000 (A) -3,750 (B)-1,250 (C)
-
NCI
13,250 (C)
13,250
Current Liabilities 20,000
20,000
40,000
Equity and Liabilities 125,000 70,000 158,750 NCI is measured at its Fair Value at the Date of Acquisition When NCI, is measured at its fair value, the implications are that there is a part of goodwill which is
attributable to the NCI and subsequent impairment losses of goodwill must also be applied against the
NCI .
The value of goodwill attributable to the NCI can be calculated as follows:
Goodwill attributable to NCI= Fair value of NCI-NCI’s Proportionate share of the acquiree’s net
identifiable assets
Example 2 – NCI is measured at its fair value at the date of acquisition Assume all the information in the above example 1 is same except NCI is measured at its fair value as at
1 January 2017. The market value per share as at 1 January 2017, was Rs.1.50.
Solution The above consolidation procedure in example 1 is applicable here except,
•
The amount of non-controlling interests is calculated as follows.
Fair value of NCI = Rs.1.50 per share * 10,000 shares (40,000* 25%) = Rs. 15,000
•
Goodwill can be calculated as follows:
Fair value of consideration transferred
50,000
Plus Amount of non-controlling interest
15,000
65,000
Less Fair value of identifiable net assets
Share capital
(40,000)
Retained earnings
(10,000)
Fair value adjustment
(5,000)
Goodwill on acquisition date
10,000
