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CMA Final · Corporate Financial Reporting · Consolidated Financial Statements and Separate Financial Statements

Gamma Ltd acquired 70% of Delta Ltd on the date when Delta's net identifiable assets were ₹50,00,000. Consideration paid was ₹40,00,000 and the non-controlling interest is measured at its proportionate share of net identifiable assets. What goodwill arises on consolidation?

Goodwill is ₹5,00,000. Add the consideration of ₹40,00,000 and non-controlling interest at proportionate share of ₹15,00,000, then deduct the net identifiable assets of ₹50,00,000. Leaving out the non-controlling interest would wrongly suggest a gain.

  1. A₹5,00,000Correct
  2. B₹10,00,000
  3. C₹(10,00,000) negative
  4. D₹3,00,000

Explanation

NCI at proportionate share = 30% x 50,00,000 = 15,00,000. Goodwill = consideration 40,00,000 + NCI 15,00,000 - net assets 50,00,000 = ₹5,00,000. Ignoring NCI gives 40 - 50 = a negative figure, which is wrong.

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