Partial goodwill method
For eligible present ownership interests, IFRS 3 permits this method as an alternative to fair-value measurement of NCI on an acquisition-by-acquisition basis. The resulting goodwill attributable to the parent does not include NCI goodwill. Add consideration and any previously held interest to the NCI measure, then deduct identifiable net assets. Do not assume every instrument held by non-controlling parties qualifies for this choice.
Worked example
A parent pays $800,000 for 80% of a business with identifiable net assets of $900,000. NCI is 20% × $900,000 = $180,000; with no previous interest, goodwill is $800,000 + $180,000 − $900,000 = $80,000.
Common mistake
Using the fair value of NCI and calling the resulting full goodwill partial goodwill, or measuring NCI as 20% of the parent’s purchase consideration.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FR | Direct | September 2026–June 2027 |
| ACCA | SBR | Direct | September 2026–June 2027 |