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Answers

CHAPTER 13 – BASIC GROP ACCOUNTS – GOODWILL AND JOINT
ARRANGEMENTS

Example 13.1

Goodwill
$

Fair value of consideration transferred by P (Birdie)
Cash 2,500

Shares (60% × 5,000 × 1/5 × $3.25) 1,950
Deferred consideration ($1,500 × 0.907) 1,361

Contingent consideration 500
–––––

6,311
Value of NCI at acquisition (at fair value) 5,000

Fair value of sub's net assets at acquisition (7,500)
–––––
Goodwill on acquisition 3,811

–––––

Note: the legal and professional fees are not included in the calculation of
goodwill. They should be expensed to the statement of profit or loss.

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