Minority Shares Buyback

Finance and Investing > Best Practices > Minority Shares Buyback

Minority Shares Buyback
Amir, Accountant, Egypt, Member
Hi, I'd like to ask about accounting for shares buyback for the following case:
10% of the shares of company A are owned by an investor. Company B buys those 10% shares from the third party investor. Company A and B are subsidiaries and their parent is a holding company (consolidation) the both financials are represented there.
Par value of the shares was 100 and the purchase price is 140. On company B investment with recorded with cost (140), on the consolidated financial, shall we record only the excess of par value (40) as goodwill or we should re-valuate the shares' fair value (assume at the moment of acquiring the 10%, the share fair value was 80) and the difference (140 - 80 = 60) should be recorded as goodwill?
Thanks for advising,....Sign up

Your Answer
enyaru antony, Business Consultant, Uganda, Member
Yeah, goodwill shall be 40 the non tangible value of the purchase since the cost originally was 100, then went to 140 -the difference is the non tangi...Sign up

Calculation of Goodwill
Henry Steyn, Analyst, South Africa, Member
Goodwill = (number of shares purchased x purchase price) - [(total number of shares x par value + retained earnings)/total number of shares)] x...Sign up

luckmore mutisi, Student (MBA), Zimbabwe, Member
I agree with Enyaru Antony, goodwill will be 40 because the cost was 100 and selling 140. The difference is the non tangible value called goodwill....Sign up

Minority Shares Buyback
Popoola Ife, Accountant, Nigeria, Member
I agree with previous statements to the extent that there is still positive goodwill of 40. That is, if goodwill has not been tested for a drop in val...Sign up

Minority Shares Buyback Method
Girish L. Chhagani, Coach, India, Member
Book value of shares = 10% (share capital + capital reserves and surplus as on date of purchase of shares)
If the book value per share > 140 tha...Sign up

Minority Shares Buyback Accounting Method
Amir, Accountant, Egypt, Member
Thanks all, thanks for your input and advices, here is what has been done which I consider complies with your opinion:
I booked it as 100 investm...Sign up

Finance and Investing

Best Practices


About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
2019 12manage - The Executive Fast Track. V15.1 - Last updated: 18-7-2019. All names of their owners.