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Question 9. Dolphin Co acquired an 80% share of Whale Co on 1 April 20X1 for...

Question 9. Dolphin Co acquired an 80% share of Whale Co on 1 April 20X1 for $5m. The fair value of the net assets of Whale Co on that date were $3m. The non controlling interest was valued at $0.8m, its fair value. Calculate goodwill based on the full goodwill method under IFRS 3.

$2.6m

$2.8m

$2.0m

$2.4m

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Answer #1

Ánswer. $2.8 M

Controling interest

Net assets of Whale Co $3 M

Shares acquire by Dolphin Co 80% (Controlling interest )

Value of share of Dolphin Co $2.4 M

Initial investment by Dolphin Co $ 5 M

Goodwill as per controlling interest (A)    $ 2.6 M

Non-Controling interest

Net assets of Whale Co $3 M

Non controlling interest 20% (Non controlling interest)

Value of Non controlling interest $0.6 M

Value as per book $0.8 M

Goodwill as per Non controlling interest (B) $0.2 M

Full Goodwill = A+B

$2.6 + $0.2 = $2.8

Note:- goodwill is the difference between the consideration paid and the purchaser’s share of identifiable net assets acquired. In full goodwill we consider goodwill of controlling as well as non controlling interest.

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