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Goodwill

This topic has 3 replies, 3 voices, and was last updated 8 years ago by MikeLittle.

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November 21, 2013 at 1:27 pm #147154
hasanali95
- Topics: 239
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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 🙂
November 21, 2013 at 3:59 pm #147222
icedawn
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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
November 23, 2013 at 8:42 am #147466
hasanali95
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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?
November 23, 2013 at 10:41 am #147480
MikeLittle
Keymaster
- Topics: 26
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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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