Fna Project Q10

  • November 2019
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Question 10 Is there a “minority interests” item on the balance sheet and, if so, what does this refer to? Is there a “goodwill” item on the balance and, if so, how did this arise? Yes, there is a “minority interests” item on the balance sheet. Minority interests refers to the event whereby the parent company i.e. Stamford Tyres Corporation Limited, purchases less than 100% of the shares of her subsidiary companies. In this case here, minority interests on the consolidated balance sheet indicate the percentage of the subsidiaries’ equities which are not held by Stamford Tyres Corporation Limited. The minority interests can be thought of as an adjustment .This is because during the preparation of the consolidated balance sheet, Stamford Tyres Corporation is assumed to have whole ownership of her subsidiaries. Yes, there is a “goodwill” item on the balance sheet. Goodwill arose when Stamford Tyres Corporation Limited paid more than the market value of her subsidiaries’ net assets in order to acquire the subsidiary companies. Goodwill is regarded as an intangible asset which Stamford Tyres Corporation Limited has made in excess payment to acquire the subsidiaries.

GOODWILL IS NOT FOUND ON THE BALANCE SHEET! Anyone to help? Suggestions?

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