1. Special Appendix 1
Possible New Consolidation
Procedures - Goodwill

2. FASB Proposal for Consolidations
The NCI would share in the adjustments to fair value made on the purchase date
Two alternatives
Economic Unit Theory with Full Goodwill All accounts including goodwill would be adjusted to 100% of fair value
Economic Unit Theory with Goodwill only on Controlling Interest All accounts, except goodwill, would be adjusted to 100% of fair value.
SA #1

3. Adjustments on the D&D Schedule
SA #1

4. D&D: Parent Company Concept
Price paid $500,000
Interest acquired (80%  400,000) 320,000
Excess of cost over book value 180,000
Building (80%  125,000) 100,000
Goodwill 80,000
SA #1

5. D&D: Economic Unit, Full Goodwill
NCI Control Total
Price paid $500,000
Interest (80%  400,000) 320,000
Excess 180,000
Building $25, ,000 $125,000
Goodwill 20,000 80, ,000
Total goodwill: $80,000  80% = $100,000
Total Adjustments: $45,000 $180,000 $225,000
SA #1

6. D&D: Economic Unit, Goodwill Only on Controlling Interest
NCI Control Total
Price paid $500,000
Interest (80%  400,000) 320,000
Excess 180,000
Building $25, ,000 $125,000
Goodwill n/a 80,000 80,000
Total Adjustments: $25,000 $180,000 $205,000
SA #1

7. Worksheet Modifications
NCI equity account added
picks up NCI share of adjustments
used for prior period amortizations applicable to NCI
is extended to NCI column
Amortizations include NCI share of adjustments
Sub IDS picks up amortizations of excess
this allows adjustments to be shared by parent and sub
SA #1