ExpertEasy2 marksShort Answer
ACCA · Question 26 · Financial Reporting
Section B - Case 3: BioHealth Holdings
BioHealth Holdings acquired 75% of the equity share capital of MedTech Co on 1 January 20X8 for $8,500,000. At the acquisition date, the fair value of MedTech's net assets was $9,200,000. BioHealth values the non-controlling interest (NCI) at fair value, which was $2,600,000 at the acquisition date.
Calculate the goodwill arising on the acquisition of MedTech Co. (Provide the numeric value in dollars).
Section B - Case 3: BioHealth Holdings
BioHealth Holdings acquired 75% of the equity share capital of MedTech Co on 1 January 20X8 for $8,500,000. At the acquisition date, the fair value of MedTech's net assets was $9,200,000. BioHealth values the non-controlling interest (NCI) at fair value, which was $2,600,000 at the acquisition date.
Calculate the goodwill arising on the acquisition of MedTech Co. (Provide the numeric value in dollars).
How to approach this question
Add the consideration transferred to the fair value of the NCI. Subtract the fair value of the identifiable net assets at acquisition.
Full Answer
Consideration transferred = $8,500,000.
Fair value of NCI at acquisition = $2,600,000.
Total value of business = $11,100,000.
Less: Fair value of net assets at acquisition = ($9,200,000).
Goodwill = $1,900,000.
Common mistakes
Calculating proportionate NCI instead of using the given fair value of NCI.
Practice the full ACCA FR — Financial Reporting Practice Exam 6
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