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A Co acquires a 60% equity shareholding in B Co. the purchase consideration is $130,000. The...

A Co acquires a 60% equity shareholding in B Co. the purchase consideration is $130,000. The fair value of B Co’s net assets at the date of acquisition is $160,000 and their book value is $110,000. The goodwill arising on the acquisition, measured in accordance with IFRS 3 using the purchased goodwill method (Where the NCI is measured at its share of the acquiree's identifiable net assets)

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Answer #1

Goodwill is 'an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognised' . In simple terms, goodwill is measured as the difference between:

  • the consideration paid plus any NCI, and
  • the acquisition–date fair value of identifiable net assets acquired

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