Vivendi, headquartered in Paris, is a worldwide leader in digital entertainment. In 2009, Maroc Telecom, a subsidiary

Question:

Vivendi, headquartered in Paris, is a worldwide leader in digital entertainment. In 2009, Maroc Telecom, a subsidiary of Vivendi, acquired a 51 percent controlling interest in Sotelma, a Malian telecoms operator, for €278 million. The book value of Sotelma at the date of acquisition was €35 million. The estimated fair value of Sotelma's noncontrolling interests was €208 million. Fair value adjustments to Sotelma's identifiable net assets were (in millions):
License, depreciated over 8 years €24
Customer bases, depreciated over 8 years 2
Deferred tax, net (3)
Total fair value adjustments ........................................................... €23
Vivendi and its subsidiaries follow IFRS, and choose to value noncontrolling interests at fair value. Round all answers below to the nearest million.
Required
a. Calculate total for this acquisition, and its allocation to the controlling and noncontrolling interests.
b. Does the purchase price include a control premium? Explain.
c. Prepare eliminating entries E and R required to consolidate Sotelma with Maroc Telecom at the date of acquisition.
d. If Maroc Telecom had used the alternative method for valuing the noncontrolling interest, at what value would the noncontrolling interest be reported at the date of acquisition? Goodwill
Goodwill is an important concept and terminology in accounting which means good reputation. The word goodwill is used at various places in accounting but it is recognized only at the time of a business combination. There are generally two types of...