Co Jaguar Ltd purchases 40% of voting rights and capital of Co Coati Ltd for 700 as of Jan 1st 2012. The Equity of Co Coati Ltd at that time 1650. In 2012 Co Coati Ltd made a profit of 130 (of which 40 are paid out as dividend the following year), in 2013 a loss of 50 results. No dividends were paid in 2012.
a. calculate the goodwill as of the purchase date.
[table] Situation,%,Capital Equity as of Jan1st,100,1650 Fair value of 40%,40,660
Paid price for 40%,40,700
Calculated value of 100%,100,1750[/table] [table]Calculation of goodwill
Difference (paid price) 700 - (fair value price) 660,40[/table]