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Company A buys 70% of 20000 2€ordinary shares of company B for 5€ per share. The...

Company A buys 70% of 20000 2€ordinary shares of company B for 5€ per share.

The Noncurrent Assets of company B have a Fair value of 40000€.

Company A Company B
Noncurrent Assets 90000 20000
Investment -
Net Current Assets 18000 28000
Net Assets 150000 48000
Share capital 124000 40000
Retained Earnings 26000 8000
Tot Equity 150000 48000

Compute the amount of Goodwill and Non controlling interest

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Answer #1

Fair value of Company B as on date of acquisition : Non Current Assets + Net Current Assets = 40,000 + 28000 = 68,000

So the amount of goodwill = Amount Paid - Fair value of assets acquired = (20000*70%*2) - (68000*20%) = 13600 - 70000 = 56,400

Non Controlling Interest = Fair value of the company B * Non controlling interest = 68000 * 30% = 20,400.

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