In 2006, A acquired a 100% equity interest in B for cash
consideration of $125,000. B’s identifiable net assets at fair value
were $100,000. Goodwill of $5,000 was identified and recognized.
In the subsequent years, B increased net assets by $20,000 to
$120,000. This is reflected in equity attributable to the parent.
A then disposed of 30% of its equity interest to non- controlling
interests for $40,000.
Calculate the increase or decrease to be recorded in equity.
the increase or decrease to be recorded in equity:
|Acquisition price paid for B||$125000|
|Less: Goodwill identified||– $5000|
|Value of 100% equity acquired||$120000|
|Less: Non-controlling interest (30%)||$40000|
|Value of 70% of the Equity acquired||$80000|
|Less: Fair value of the 70% of equity ($100000 * 70%)||-$70000|
|Increase in the equity of 70% of equity||$10000|