Hi guys,
In all problems I have ever done in order to calculate say PGW you take the purchase price - Fair Value of Assets * % takeover. = PGW. FGW can then just be looked at as PGW/ % ownership.
As an example: We pay 60m for 80% of a company B. B has 65 Fair value (common stock and RE) Therefore PGW = 60- (0.8*65) = 8 FGW is therefore 8/0.8 = 10.
There is a question in a wiley mock which says Company A acquired 90% in exchange for $600,000 worth of shares. The fair market value of B on acquisition was $800,000.
FV net assets = $329,000
what is full goodwill and partial goodwill?
I calculated PGW as 600,000- (0.9*329,000) = 303,900 FGW therefore 303,900/0.9 = 337,666
My PGW is correct but the GFW is using the calculation 800,000-329,000 = 471,000. How come FGW is not just 337,666?
In all problems I have ever done in order to calculate say PGW you take the purchase price - Fair Value of Assets * % takeover. = PGW. FGW can then just be looked at as PGW/ % ownership.
As an example: We pay 60m for 80% of a company B. B has 65 Fair value (common stock and RE) Therefore PGW = 60- (0.8*65) = 8 FGW is therefore 8/0.8 = 10.
There is a question in a wiley mock which says Company A acquired 90% in exchange for $600,000 worth of shares. The fair market value of B on acquisition was $800,000.
FV net assets = $329,000
what is full goodwill and partial goodwill?
I calculated PGW as 600,000- (0.9*329,000) = 303,900 FGW therefore 303,900/0.9 = 337,666
My PGW is correct but the GFW is using the calculation 800,000-329,000 = 471,000. How come FGW is not just 337,666?