# Partial v Full goodwill - EXAMPLE

hey guys, i have a heavy acctg background (GAAP not IFRS) and I struggle a bit with partial v full goodwill. Can someone lend a hand ? Lets use a real example. Company A has assets of \$1 billion, liabilities of \$300 million, and equity of \$700 million. It purchases 80% of company Z for \$400 million. Company Z has assets of \$200 million, liabilities of \$100 million, and equity of \$100 million. Assume the assets and liabilities of Company Z approximate their fair values. What would Company A’s B/S look like under the Partial Goodwill Method? (1) Goodwill = ? (2) All other assets = ? (3) Total assets (1+2) = ? (4) Total Liabilities = ? (5) Noncontrolling Interest = ? (6) All other Equity = ? (7) Total equity = (5+6) = ? What would Company A’s B/S look like under the Full goodwill method? (1) Goodwill = ? (2) All other assets = ? (3) Total assets (1+2) = ? (4) Total Liabilities = ? (5) Noncontrolling Interest = ? (6) All other Equity = ? (7) Total equity = (5+6) = ?

seems odd that someone would pay 400\$ for something with assets of 200\$.

Full purchase = 400/.8 = 500 Fair Value of Net Asset = 200 - 100 = 100 Full GW = Purchase - FV of net asset = 500 - 100 = 400 Partial GW = 400*.8= 320

cpk123 Wrote: ------------------------------------------------------- > seems odd that someone would pay 400\$ for > something with assets of 200\$. Lol. Thats what I was thinking.

I know the numbers may look a little screwy. Assume there are high expectations of synergies. THe whole nature of goodwill is a purchase price higher than the assets acquired…

is noncontrolling interest recorded under the partial goodwill method?

The formula I have for GW is Mark up in fixed assets X (such as PPE) - L + CA if no mark up (revision to FV) then it should just be A - L or the purchase price over equity. Then take the %.