ACCA FA consolidation practice
Consolidation questions become manageable when each adjustment is handled separately and then brought into the group statements.
- ✓Identify the parent, subsidiary, and acquisition date
- ✓Calculate goodwill using the stated NCI method
- ✓Remove intra-group balances and unrealised profit
Worked question
A parent pays €400,000 for 80% of a subsidiary whose net assets have a fair value of €420,000. NCI is measured proportionately. What is goodwill?
- A. €0
- B. €64,000
- C. €80,000
- D. €148,000
Answer: €64,000
Proportionate NCI is 20% of €420,000, or €84,000. Goodwill is €400,000 plus €84,000 minus €420,000, which equals €64,000.
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