Sir I am sending a question from cma final Business Valuation... that is having same chapter as cfr.. Valuation of shares.. In cfr you taught us sir that we shudnt take preference dividend while calculating goodwill net assets. But here they had dedicated pref dividend and pref capital.. for calculating Goodwill.. why sir?

Sir I am sending a question from cma final Business Valuation... that is having same chapter as cfr.. Valuation of shares.. In cfr you taught us sir that we shudnt take preference dividend while calculating goodwill net assets. But here they had dedicated pref dividend and pref capital.. for calculating Goodwill.. why sir?

Anjana Behara | Asked On: | 133 Views

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WS (student) | Answered On: | 1

It could be a big conceptual mistake on part of the material preparation team - and let me tell you the institute's material is full of printing mistakes and conceptual too and that's the reason we solve all the problems of the institute's material in our CFR tutorials... if you are computing net assets from the liabilities side then preference share capital and preference dividend both shall be subtracted. first, add ESC + PSC + Reserves - Value less assets = Owners equity now subtract preference share capital and dividend to get equity shareholders equity that is net assets available for equity shareholder. However, under Goodwill, capital employed means owners' Equity and that is the reason we don't subtract pref. Share capital and dividend thereon.

Anjana Behara (student) | Answered On: |

Thanks a lot sir

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