✏️+🎥Business Combination Goodwill Question🟢

Responses

1. 

   Krithika Karthik 26 January 2025

   Hi,
   May you pls explain why we are not taking 80% for 100000 Plant ?

   1. 

      Him Kandel 22 April 2025

      I think it should be reduce only 80K

2. 

   oussama mellouli 17 March 2025

   Can you please upload the ppt file for this video lecture? Also, it would be nice to consolidate all slides for each chapter all together if possible. Thanks

3. 

   Mihwa 15 August 2025

   I just don’t think this question wording very clear. When they said net identifiable FV of the assets, which that worth 1mil didn’t clearly indicate the mount represents 100% of the sub or 80%, resulting I calculated the goodwill with $9,5000 instead.

4. 

   Carlos Alvarado 5 October 2026

   Business Combination Goodwill Question i believe the answer may be not correct or can you explain why if For the extra of the book value $100,000 are not thos e for the net assets of the company, therefore it would be 800,000 book value – (xtra fair value 0.80 * 100,000 which is the part that is buying 80%= 80,000) therefore price paid 975,000-800,000 book value -80,000 excees book value in the 80% acquired = would not be 95,000 instead of 75,000 goodwill. Business Combination Goodwill Question

   1. 

      Maroun, CPA 6 October 2026

      Hello Carlos,

      The $75,000 answer is correct because the acquisition method uses the full-goodwill approach.

      Although Ritt purchased 80% of Shaw, it obtained control and therefore consolidates 100% of Shaw’s identifiable assets and liabilities. Accordingly, the entire $100,000 plant asset fair-value increase is recognized, not only 80%.

      Shaw’s identifiable net assets at fair value are:
      $1,000,000 + $100,000 = $1,100,000

      Goodwill is calculated as follows:
      Goodwill = Consideration transferred + Fair value of the noncontrolling interest − Fair value of identifiable net assets

      Goodwill = $975,000 + $200,000 − $1,100,000 = $75,000

      Your $95,000 calculation equals $975,000 minus Ritt’s 80% share of the $1,100,000 net assets. However, that calculation considers only Ritt’s ownership interest and omits the separately valued 20% noncontrolling interest. The noncontrolling interest’s fair value must be included when calculating consolidated goodwill.

      Hope this helps!