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 with acquisition-date NCI at fair value
- ✓Remove intra-group balances and unrealised profit
Worked question
A parent pays €400,000 for 80% of a subsidiary. At acquisition, the full fair value of identifiable net assets is €420,000 and the fair value of NCI is €100,000. There are no other adjustments. What is goodwill?
- A. €0
- B. €64,000
- C. €80,000
- D. €148,000
Answer: €80,000
Goodwill is consideration plus the given fair value of NCI less the full fair value of identifiable net assets: €400,000 + €100,000 - €420,000 = €80,000. The 20% ownership proportion does not replace the supplied NCI fair value.
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