Case Study 15: Goodwill (AASB 3/10)
When Hydra Ltd acquired the shares of Draco Ltd, one of the assets in the statement of financial position of Draco Ltd was $15 000 goodwill, which had been recognised by Draco Ltd upon its acquisition of a business from Valhalla Ltd. Having prepared the acquisition analysis as part of the process of preparing the consolidated financial statements for Hydra Ltd, the group accountant has asked for your opinion.
Required
Provide advice on the following issues: How does the goodwill previously recorded by the subsidiary affect the accounting for the group’s goodwill?
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