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andynyc wrote:
nvestn wrote:
ff8789 wrote:
SpyAli wrote:
EQUITY METHOD:
Full Goodwill – Fair Value - BOOK Value of Net Identifiable assets (same under IFRS and US GAAP)
Equity reminds me of Book Value
ACQUISITION METHOD:
Full Goodwill – Fair value - Fair Value of Net Identifiable assets (same under IFRS and US GAAP)
Partial Goodwill – Purchase Price - Parents Proportionate share of Net Identifiable Assets (only under IFRS)
So its FF under Full goodwill and PPPP under Partial goodwill
this is really helpful. thanks!
[snip]
I honestly think that is wrong for the equity method part… IT IS NOT BOOK VALUE!!
Goodwill is goodwill, regardless of which way you report it. Goodwill is purchase price in excess of fair value of net identifiable assets. No questions.
Equity method you take purchase price less acquiror’s share of BOOK VALUE of EQUITY less amount of excess (i.e. fair value - book) attributed to tangible assets. Purchase - Fair value is not entirely accurate. That just determines excess for the tangible assets. Plus if any intangibles you would need to account for that. The rest of purchase price allocated to book value of equity.
The 2011 Mock Q44 AM makes this crystal clear. If that is wrong and there is documented proof please share so we can all be confident in the answer since this topic will for sure be tested.
Im not sure I understand what you’re saying. But I just had a look at Q44 and redid the question and got it right based on my method. You report the investment account at purchase price which includes $273,000 of Goodwill. That $273,000 comes from excess of purchase price over FV of NIA (Purchase price = $1,365,000 minus ($3,360,000 x 32.5% = $1,092,000) = $273,000. [Notice how I’ve determined goodwill, just like in the answer sheet, without using book value of anything…]
At that point, the only reason you care about previous book value is to depreciate identifiable assets that you have “written up”. In this case, you’ve written up the assets you bought by $234,000 (this is NOT goodwill) and must now deduct 1/10 of that amount as depreciation (less the portion attributable to land as land is not depreciable) from the 2008 NET INCOME allocation of Great Lakes.
In this case, you wrote up $234,000 of assets but only depreciate based on $222,300 (don’t depreciate gain on land). That amount divided by 10 gives you $22,230.
The answer is achieved by looking at purchase price $1,365,000 less depreciation $22,230 plus our share of NI $390,000 less our share of dividends paid $163,800 = $1,568,970. |
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发表于 2013-4-22 08:00
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