Consolidation: non-controlling interest
3 important questions on Consolidation: non-controlling interest
Non-controlling interest (NCI)
Equity in a subsidiary not attributable, directly or indirectly, to a parent.
Full goodwill method
Under this method, at acquisition date, the NCI in the subsidiary is measured at fair value. The fair value is determined on the basis of the market prices for shares not acquired by the parent or, if the are not available, a valuation technique is used.
The acquired goodwill consists of both the goodwill of the subsidiary and the premium paid by the parent to acquire control over the subsidiary. The control premium is recognized as part of goodwill ons consolidation but is nog attributable on the NCI.
The acquired goodwill consists of both the goodwill of the subsidiary and the premium paid by the parent to acquire control over the subsidiary. The control premium is recognized as part of goodwill ons consolidation but is nog attributable on the NCI.
What are the three main differences in outcome that occurs where the partial goodwill method is used instead of the full goodwill method?
1. The amounts recognized for the NCI share of equity and goodwill would be lower
2. This affects the impairment loss relating to goodwill
3. There is also an effect where an acquirer subsequently obtains further share in the subsidiary at a later date.
2. This affects the impairment loss relating to goodwill
3. There is also an effect where an acquirer subsequently obtains further share in the subsidiary at a later date.
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