Minority Shares Buyback

Finance and Investing

Forum
Amir
Accountant, Egypt

Minority Shares Buyback

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,.

  enyaru antony
Business Consultant, Uganda
 

Your Answer

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 tangible value called goodwill....

  Henry Steyn
Analyst, South Africa
 

Calculation of Goodwill

Goodwill = (number of shares purchased x purchase price) - [(total number of shares x par value + retained earnings)/total number of shares)] x number of shares purchased....

  luckmore mutisi
Student (MBA), Zimbabwe
 

Goodwill

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....

  Popoola Ife
Accountant, Nigeria
 

Minority Shares Buyback

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 value (impairment). However, in the last scenario it ...

  Girish L. Chhagani
Coach, India
 

Minority Shares Buyback Method

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 than treat the difference as capital reserve. If book v...

  Amir
Accountant, Egypt
 

Minority Shares Buyback Accounting Method

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 investment and 40 goodwill for the shares buyback booking. A...

 

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