1.HowtovalueNCIonthedateofbusinesscombination?

NCI is valued at FMV (if given) or Prop Share (if not given)
2.HowdoyoucomputeforthefairmarketvalueoftheNCI?
Ans:NCIsharesxMVofshares
Note:FMVofsharespurchased(pricepaidbyacquirer)duringbusinesscombination
maynotnecessarily=MVofshares(inthemarket)becauseofacontrolpremium.
Reviewingthebosslevelproblems,maymgascenarionagivenangtotalconsideration
paidfortheshares.(Kevin,Migs)
TogettheFMVofNCI,wehavetoreducetotalconsiderationpaidbycontrolpremium=
TotalMVngshares(TotalsharesofSubsidiaryxMV)
Fromthere,wecanderivetheFMVofNCIby:
TotalsharesofSubsidiaryxNCIinterestxMVabove.
Ifsharepriceisgiven(whatERpaid)thenwecanreduceitbythecontrolpremiumper
sharethenmultiplyitbyNCIsharestogetFMVofNCI.
3.WhattodoifNCIisvaluedatFMVandFMVislowerthantheproportionateshareof
theFMVofthenetidentifiableasset?
Tobetterunderstandtheanswertothisquestion,refertothetableweusetocomputefor
GW/GainonBP
NoFVofNCI
(Gerards
Problem)
FMV NA (or
Excess FMV of
A/L + DOA SHE
of subsidiary)
( C ) Lets call
this IS
Total
Consideration:
(Price Paid +
FMV of NCI) (A)
NCI (B)
A+B = SHOULD

Total

To P (75%)

2,548,289.07

1,911,216.80

1,681,216.80
637,072.27

1,681,216.80

To NCI (25%)

637,072.27

637,072.27

BE
(A + B) C

(230k )
Gain on BP!

230k
Dr. Investment
in Subsidiary

Adjustment

Now, the basis for the GW/ Gain on BP adjustment is the First Column
above. While the next two columns (to P/ to NCI) are the respective
adjustments that must be made to those accounts to bring them to the
should be balance (aka their FV as discussed by maam)
(Peach and
Santol)
FMV NA (or
Excess FMV of
A/L + DOA SHE
of subsidiary)

Total

( C ) Lets call
this IS
Total
Consideration:
(Price Paid +
FMV of NCI) (A)
NCI (B)

To P (65%)

2850k

1,852,500

2M

2M

997,500

700k
700k*

(A + B) C

To NCI (25%)

(150k )
Gain on BP!

Adjustment

0
147,500
(Increase it)

297500
Adj to NCI
(Reduce it)

WPEE:
Dr. NCI, beg 297,500
Cr. Inv in S 147,500
Cr. Gain on BP 150k
*How did we get 700k as the FMV of NCI?
Share Cap of S = 1M with a par of 25 = (1M/25=40k Shares)
40k shares x 35% = 14k Shares (NCI Share)
14k x P50 = 700k
Q: Why no GW? Remember, the basis for the GW/Gain on BP is the
FIRST COLUMN which, as per the standard, is the difference between
the Total Consideration (Price Paid + FV of NCI) FMV of Net Assets,
and NOT the 2nd and 3rd columns that provide the ADJUSTMENT.
In the end, the Gain on BP will always go to the acquirer.

Maraming possible scenarios but the table basically explains the logic
about the is vs. should be.
To quote Gerard The Master Padilla,
Basically, sinasabi ni ma'am na pwedeng magkaroon ng ganitong
WPEE:
Dr: IIS
Dr: NCI
Cr: Gain on bargain purchase

4.Isthecomputedamountofgainonbargainpurchase(thatischargedtothe
incomestatement)allocatedbetweenparentandNCI?
Nope,sabinistandardtoparentlang.
IFRS3.34.Occasionally,anacquirerwillmakeabargainpurchase,whichisa
businesscombinationinwhichtheamountinparagraph32(b)exceedsthe
aggregateoftheamountsspecifiedinparagraph32(a).Ifthatexcessremains
afterapplyingtherequirementsinparagraph36,theacquirershallrecognisethe
resultinggaininprofitorlossontheacquisitiondate.Thegainshallbe
attributedtotheacquirer.