Consolidation: calculation of goodwill per IFRS 3

[muhammadrizwan]

how to calculate the goodwill as per change in IFRS-3?

[innocentboy]

Goodwill represent excess of the purchase consideration paid in an acquisition over the fair value of net identifiable assets acquired.

Suppose, you paid Rs.10 million to acquire Rs.8 million net assets (here Rs.8 million is fair value of net assets acquired).

Rs.2 million will be goodwill acquired.

[Abuzar Qazi]

Calculation of goodwill is categorised under two heads 1) partial goodwill method 2) Full goodwill methhod

Under partial goodwill method only Parent's shareholding is considered

For example

Cost of the Investment is Rs....1200000
Acquired interest in the subsidiary's assets is 80%
subsidiary's net identifiable assets are 1400000
So here the amount of goodwill is to be calculated as

Cost of Investment 1200000

Net assets of subsidiary 1400000
Parents interest (80%) (1120000)
goodwill 80000

Under full goodwill method minority's interest of goodwill is also included.The fair value of minority's interest is taken care of and either to be calculated or is given in the question.
Keeping other things same as in the above example now we calculate goodwill under full method when the fair value of minority's interest is 350000

the Full goodwill is


cost of Investment 1200000
Subsidiary's net assets 1400000
Parents share (80%) (1120000)
Parents share of goodwill 80000
Fair value of minority's interest 350000
subsidiary's net assets 1400000
Minority's interest (20%) (280000)
Minority's share of goodwill 70000

Total goodwill 150000