SS# 6: Acquisition Method - ROE

Under the full goodwill method, will equity always be higher than than the partial goodwill method? I think so, since noncontrolling interest is a part of equity and that’s always bigger with full goodwill, correct? Therefore won’t ROE be lower under full goodwill?

Yes I think you’re right. Net Income is the same. So same numerator, higher denom equals lower ROE.

Generally speaking, when there is goodwill, full goodwill method will always yield higher SE.

But if there is NO goodwill (see one of the questions at the end of the CFA reading), full or partial goodwill method will yield the same SE.


If SE is different would the total assets and minority intrest also be higher under full goodwill…?