NCI Formula

NCI Formula

NCI can be calculated in two ways

1.    NCI as proportion of net assets =Total net asset x NCI %

2.    NCI at Fair Value = Number of Share (NCI) x Market price

Example

A acquire 70% share of B

Net asset of B = 300,000

What would be value of NCI?

Solution

NCI as proportion of net assets =Total net asset x NCI %

= 300,000 x 30%

=90,000

Example

A acquire 70% share of B

Total share= 100,000

Market price of shares= 5

Net asset of B = 300,000

What would be value of NCI?

Solution

NCI at Fair Value = Number of Share (NCI) x Market price

=30000 x 5

=150,000

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