Acquisition of an associate company


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Hello all,


I'm new here and I'm facing a case that I don't know the treatment thereof:

Company A acquired 30.5% of company B on 28 Feb. 2013. Payment of $191,949,562 was made to company C (the former shareholder of company B and parent of company A @ 100%). Payment covers the following:

1- Share of capital in the subsidiary company B amounting $68,930,207 (representing 30.5% of outstanding capital at nominal value)

2- Loan originally made from company C to company B amounting $114,700,380

3- Accrued interest on the loan referred to amounting $69,555

4- Retained earning for the year 2012 amounting $20,305,121

Total of items 1,2,3 & 4 amounts to $204,005,263 which is $12,055,698 more than the consideration paid.

How can I allocate consideration paid and account for the transaction in general, is there negative goodwill here ?

PS. none of these companies are publicly listed.

Thanks you for your help.


Costa
 
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kirby

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Someone at either company a or c MUST know what this $12,055,698 is about. Keep asking till you find that person
 
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Fidget

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How can I allocate consideration paid and account for the transaction in general, is there negative goodwill here ?
It's an investment in an associate, so there wouldn't be a separate goodwill calculation as there would be for a subsidiary.

Basically, Company C's interest in Company B is $204k on its books. Company C sells that interest to Company A for $192k, therefore meaning an impairment loss of $12k to Company C on disposal of its interest in Company B.
 

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