Is goodwill the difference between share capital of the subsidiary and what you paid for it or something else?
I.e., do the b/f reserves of the sub factor into the goodwill calculation?
As an example question, if the TB of the sub at acquisition date is
Dr Assets 1m
Cr Liabilities 1.3m
Cr Share capital 100k
Dr Reserves 400k
I.e they have b/f losses and are insolvent. Let’s say we paid zero for it.
What would the journal entries in the parent be?
Dr Investments 100k
Cr Goodwill 100k ??
That doesn't seem right....
Thanks in advance guys!
I.e., do the b/f reserves of the sub factor into the goodwill calculation?
As an example question, if the TB of the sub at acquisition date is
Dr Assets 1m
Cr Liabilities 1.3m
Cr Share capital 100k
Dr Reserves 400k
I.e they have b/f losses and are insolvent. Let’s say we paid zero for it.
What would the journal entries in the parent be?
Dr Investments 100k
Cr Goodwill 100k ??
That doesn't seem right....
Thanks in advance guys!