Hi,
How would you approach a question that ask, how does the nature of consideration affect the calculation of goodwill.
I have explained about the different types of consideration such as cash, deferred cash (how it must be discounted), contingent consideration(use the fair value), shares (prices are volatile therefore may change and change the value of goodwill) etc however i am unsure how to link it back to the calculation of goodwill and how it affects it.
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SBRconsideration
Just apply the basic formula for calculating goodwill at acquisition.
Goodwill = Consideration + NCI - Net assets value of the subsidiary
If the consideration changes (due to any of the reasons which you explained) whilst NCI and NAV remain unchanged, goodwill will be affected.
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