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(All amounts in millions of Euros- state your answer as such) P Company, who uses IFRS,...

(All amounts in millions of Euros- state your answer as such)

P Company, who uses IFRS, acquired 75% of S for 1,600. The fair value of S's identifiable assets and liabilities at acquisition date were: Assets = 3,100; Liabilities = 1,700. The shares of S not acquired by P had a total market value of 300 at acquisition date. SHOW AND LABEL ALL COMPUTATIONS

1. How much would the non-controlling interest (NCI) AND goodwill be using the proportionate share method?

2. If P was a U.S. company using U.S. GAAP, what would NCI AND goodwill be?

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Answer #1

1). in$000

purchase consideration 1600

+fair value of NCI at date of aquisiton 300

- fair value of net asset at date of aquisition (1400)

= GOODWILL 500

CALCULATION OF NCI    in$000

fair value of NCI at date of aquisition 300

+proportionate share 350(1400*25%)

NCI 650

2). if U.S G.A.A.P is used instead incase of goodwill then, goodwill aquired through business combination is no longer amortized but tested for impairment and incase of NCI,no change is required

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