Fair Value in Full/Partial Goodwill Method of Consolidation

So I’ve never come across a question regarding full/partial goodwill like this, and want to make sure I am understanding what to do in this scenario:

Company A acquires 80% of company B for $500,000. Company B’s fair value = $800,000 (stated explicitly within the question). Company B’s Fair Value of Net Identifiable Assets (FVNIA) = $300,000.

In calculating goodwill under the full goodwill method I would use the stated fair value of $800,000 - $300,000 (FVNIA) as opposed to the implied fair value from my purchase price: $500,000/.80 = $625,000 to calculate full good will of $500,000 ($800,000 - $300,000)?

I’ve always used the implied fair value as a question has never explicitly stated a fair value of the firm to be acquired (which differed from the implied fair value derived from the purchase price). Based on the answers to the question, I use the stated fair value (if explicitly given), otherwise, I use the fair value implied by the purchase price. Is this correct?

Partial GW is $260K and Full GW is $325K.

Fair value of net identifiable assets = $300K.

80% of $300K = $240K.

Partial GW = $500k - 240K = $260K

FG = $260/.8 = $325K

If he got 80% of the company for $500K, how could the fair value be $800K unless he got a bargin purchase.

This is a bargain purchase. Gain on I.S., no GW.

Edit: After I look up ASC 805 and other FASB sources, this is in fact NOT a bargain purchase because according to the definition “an acquirer may make a bargain purchase, a business combination where the acquisition-date amounts of identifiable net assets acquired, excluding goodwill, exceed the sum of the value of consideration transferred.” The definition is the same under IFRS and GAAP per FASB.

So, 125mph’s calculations are correct.

So I agree with you 125mph, but this question used the fair value listed in the question $800,000 as the basis for the calculation of full goodwill and I was thrown off. Good to know this was likely just an error.