Goodwill
formula
Goodwill can be calculated by adding cost investment to
the non controlling interest and deducting the fair value of subsidiary net
asset.
Good will = Cost of investment + Fair value of NCI –
Fair value of net asset
Goodwill
formula Example
A&A Company acquired an entity 70% by paying $
120,000. Fair value of NCI is 35,000. Calculate the Goodwill, where fair value
of net asset is 140,000.
|
Cost
of investment
|
120,000
|
|
Fair
value of NCI
|
35,000
|
|
Total
( 120,000+ 35,000)
|
155,000
|
|
Fair
value of net asset
|
(140,000)
|
|
Goodwill
|
15,000
|
Important to remember that total value of net asset is deducted,
because the NCI fair value has already added to the cost of investment.
