Goodwill: clarification

CFA Level II FRA
#1

FRA - Intercorporate Investment s- Goodwill Hi,

Just a quick question.

If we buy 100% of a company, in both IAS or US GAAPS, we choose the full goodwill approach: Purchase price - Fair value of net identifiable assets = Acquisition goodwill Purchase price - (Current Assets + PPE - Liabilities) = Acquisition goodwill

BUT, if we pay less that 100%, let’s say 75%, In US GAAPS, we will use full goodwill approach (as above). (Purchase price/Proportion bought) - Fair value of net identifiable assets = Acquisition goodwill (Purchase price/Proportion bought) - (Current Assets + PPE - Liabilities) = Acquisition goodwill

In IAS/IFRS, we will use partial goodwill approach. Purchase price - (Proportion * Fair value of net identifiable assets) = Acquisition goodwill The question of using full or partial goodwill will be asked only if we buy less than 100% of the company. Can you confirm?

Regards

#2

Yes, the question arrives only if the acquisition is less than 100%.

#3

there would be no need for partial goodwill since the company was acquired at 100%. even if you were to apply the partial goodwill method, the answer you would arrive at would be the same

#4

there would be no need for partial goodwill since the company was acquired at 100%. even if you were to apply the partial goodwill method, the answer you would arrive at would be the same