Skip to main content

PURCHASED GOODWILL METHOD UNDER IND AS 103

This image has an empty alt attribute; its file name is purchased-goodwill-calculation-method-under1.jpg

The acquisition of subsidiaries results in Goodwill calculation and also records net assets of the subsidiary at fair value on the date of acquisition. Let’s get answers to all the questions related to Goodwill, valuation of NCI, and impairment relating to them.

Q1 – What are the ways in which an entity can make payment for purchase consideration?

ANS:

– Cash

– Share exchange

– Deferred payment

– Contingent consideration

Q2 – How is deferred payment dealt, when it forms part of purchase consideration?

ANS: The deferred payment is discounted to present value and included in the cost of consideration. At the end of each year, the liability is increased by unwinding the discount, until the payment is settled. For example,

An amount of Rs. 108,000 was deferred to be paid after 2 years. The discount rate applicable is 8%. The net present value today of Rs. 108,000 is equal to (108,000 * 1) / (1.08) ^2)= Rs. 92,593 included in purchase consideration.

A liability of Rs. 92,593 is recorded on the same day.

At the end of the year, the unwinding of discount (8%*92593) results in a charge of Rs. 7,407 to profit & loss a/c for the unwinding of discount, increasing the Liability to Rs. 100,000 (92,593 + 8%*92593 = Rs. 100,000).

Learn more Goodwill Calculation – IFRS 3 Business Combinations questions here....

ALSO READ:

Prepare yourself for ACCA International Financial Reporting Standards Certification with Takshila Learning IFR expert faculty ACCA Amit Kumar. We offer the IFR Course which is also one of our Best Selling Courses.

We, here at Takshila Learning, assist you to prepare smartly for ACCA Diploma in IFRS with our IFRS Online Classes by our Industry Expert Faculty. Our IFRS Course Online comprises IFRS Online Classes, Video Lectures , study notes, Doubt sessions along with Faculty Support and many more.

CALL AT 8800999280 / 8800999283 / 8800999284  FOR ANY OTHER DETAILS:

Comments

Post a Comment

Thank you we will contact ASAP.

Popular posts from this blog

Allotment of DIN (Director Identification Number)

Allotment of DIN (Director Identification Number) CS professional course :  Section 153 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Qualification of Directors) Rules, 2014 Every individual intending to be appointed as a director as a director of a company shall make an application for allotment of Director Identification Number (DIN) to the Central Government in such form and manner and along with such fees as may be prescribed. Rule 9 of Companies (Appointment and Qualification of Directors) Rules, 2014 (1) Every Individual, who is to be appointed as a director of a company shall make an application electronically in Form DIR 3, to the Central Government for the allotment of a DIN along with such fees as provided in the Companies (Registration Offices and Fees) Rules, 2014. (2) The Central Government shall provide an electronic system to facilitate submission of an application for the allotment of DIN through the portal on the MCA21...
Post a Comment
Read more

Contract of Guarantee important topic for CS Professionals

Contract of Guarantee important topic for CS Professionals For  CS Course  , Takshila Learning is offering CS Professional online classes for students in an easy, convenient, and simple way through our portal  www.takshilalearning.com .  It helps students to grab the conceptual knowledge in a different but simple way. CS online classes for CS preparation are a collection of HD-quality recorded lectures with the detailed explanation of the content by experienced and well-known faculties. An interesting topic from Drafting – ‘ Guarantees ’ is discussed below: Guarantees Contract of Guarantee A “ contract of Guarantee ” is a contract to perform the promise, or discharge the liability, of a third person in case of his default. A Guarantee may be either oral or written. Parties involved in the Contract Surety:  The person who gives the guarantee is called the  “surety”. Principal debtor:  The person in respect of whose default the gua...
Post a Comment
Read more