I read somewhere that under U.S. GAAP, only full goodwill is allowed. So if Company A purchased 20% ownership of Company B, I should intially determine the full price that would have been paid (i.e. Paid/0.20 = Full payment). However, I ran into a problem where the goodwill was calculated pro-rata (i.e. goodwill x 20% = goodwill portion for Company A). I thought this is not allowed under U.S. GAAP, only under IFRS allows full/partial goodwill. Am I mistaken?
US GAAP requires full goodwill.
This is only an issue if the acquisition method is used. In your example only 20% is acquired, so it should be accounted for as a passive investment or significant influence (equity method).
ahhh ok, thank you. Makes sense as to why there was a difference.
FTFY
Influence and control determine the method used. If you own only 20% but have control, you use the acquisition method.