We calculate goodwill on a proportionate basis as follows
Cost of Investment +Nci % of Net assets -Net assets of sub @acq
But in a technical article,they have done like this
Cost of investment-CI share of net assets
Which one is correct?
Thanks :)
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Goodwill
If it is said nci is calculated on a proportionate basis of na then we use partial goodwill method that is there will be no goodwill for nci.
The 1st equation is correct but i dont understand what you wrote for the 2nd one....
Anyway the 2nd way to calculate goodwil under partial goodwill method is that you take cost of investment ( the purchase consideration) - ( Percentage acquired by parent X NA) = goodwill
Ok thanks
Thats what ive written for the 2nd
Is the 2nd way allowed and will it give the same answer like the 1st one?
How can it not give the same answer? If nci is valued on a proportionate basis, if the partial goodwill method is used, then either approach is fine
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