Goodwill Formula

Goodwill Formula

Goodwill formula can be calculated by the following formula

Goodwill = Cost of investment + Fair value of NCI- Fair value of net asset

Example

70% shares bough = 140,000

Fair value of Non controlling interest = 60,000

Net asset value = 150,000

Solution

Goodwill = Cost of investment + Fair value of NCI- Fair value of net asset

= 140,000+60,000-150,000

=50,000 (Goodwill)

Fair value of NCI – Market price of the shares

Fair value of NCI- proportion of fair value of net asset