Question 10

Is there a “minority interests” item on the balance sheet and, if so, what does this refer
to? Is there a “goodwill” item on the balance and, if so, how did this arise?

Yes, there is a “minority interests” item on the balance sheet. Minority interests
refers to the event whereby the parent company i.e. Stamford Tyres Corporation Limited,
purchases less than 100% of the shares of her subsidiary companies. In this case here,
minority interests on the consolidated balance sheet indicate the percentage of the
subsidiaries’ equities which are not held by Stamford Tyres Corporation Limited. The
minority interests can be thought of as an adjustment .This is because during the
preparation of the consolidated balance sheet, Stamford Tyres Corporation is assumed to
have whole ownership of her subsidiaries.

Yes, there is a “goodwill” item on the balance sheet. Goodwill arose when
Stamford Tyres Corporation Limited paid more than the market value of her subsidiaries’
net assets in order to acquire the subsidiary companies. Goodwill is regarded as an
intangible asset which Stamford Tyres Corporation Limited has made in excess payment
to acquire the subsidiaries.

GOODWILL IS NOT FOUND ON THE

BALANCE SHEET! Anyone to help?
Suggestions?