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Group accounting – Basic groups

5.5 Recognise goodwill and the NCI

Consideration

When calculating goodwill (W3), purchase consideration is measured at fair value.

Method of payment Measurement

Cash (upfront) Cash paid

Deferred cash Present value (PV)

Shares (upfront) Fair value at acquisition

Deferred shares Fair value at acquisition

Fair value

Contingent The exam will either provide the fair
consideration value or enough information to
calculate it.

Professional fees are expensed to profit or loss.

Illustrations and further practice

You can now attempt TYU question 4 from Chapter 19.

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