Advanced Financial Accounting

Added on -2020-07-22

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ADVANCED FINANCIALACCOUNTING
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................3(a)Explain how the nature of the consideration affects the calculation of goodwill.......................3(b) Discuss whether the use of the “full goodwill” as preferred by IFRS 3 Business Combinations is mandatory.............................................................................................................4© Explain what the effect of selecting the “full goodwill” method rather than the proportion of net asset method would be...............................................................................................................5(d)Advice the board of Expander as to the appropriate accounting policy to adopt in respect of measuring non-controlling interest at acquisition............................................................................6CONCLUSION................................................................................................................................7REFERENCES..........................................................................................................................................8
INTRODUCTIONMerger and acquisition is done by most of business firms to expand their business atrapid pace. In current time period varied small and big deals are happening in varied nations ofthe world. Accounting in merger and acquisition deals become more complex. In the currentreport, nature of consideration and its impact on calculation of goodwill is explained in detail. Inmiddle part of the report, full and partial goodwill methods are discussed in detail. Apart fromthis, accounting policy that is adopted in respect to measurement of non-controlling interest arealso discussed in detail. At end of the report, conclusion section is developed in the report.(a)Explain how the nature of the consideration affects the calculation of goodwillAcquisition is commonly taken place in the business and under this, one company acquires other company. There are number of approaches that are used to calculate considerationlike partial and full consideration. There is significant importance of both sorts of approaches for the firms. In order to understand extent to which nature of consideration have impact on the calculation of goodwill it is very important to comprehend both partial and full consideration approaches in proper manner (Khokan Bepari, M., F. Rahman, S. and Taher Mollik, A., 2014). Figure 1Details of buying cost
Figure 2Partial Goodwill CalculationFigure 3Full Goodwill calculationIt must be noted that in partial consideration approach simply net identifiable asset value is takenin to consideration. It can be seen from table given above that buying cost is 14502.75 in case of full and partial goodwill method. However, net control interest value is different and same is 1938 for full goodwill method and 3200 for partial goodwill method. Due to difference in values

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