Full goodwill

Goodwill with the non-controlling interest measured at fair value, so it covers the whole subsidiary. Partial goodwill measures that interest at its share of net assets and covers only the parent's part.

Where you will meet it

Full goodwill appears in 2 learning outcomes on the CFA syllabus. A few of them:

• Set IFRS against US GAAP on how each classifies, measures and discloses financial asset investments, associates, joint ventures and business combinations, as well as special purpose entities and variable interest entities
  CFA Level II · Financial Statement Analysis

  “For business combinations, IFRS lets the acquirer measure the non-controlling interest at fair value (full goodwill) or at its share of identifiable net assets (partial goodwill), while US GAAP requires fair value, so full goodwill.”

• Analyse how the choice of accounting method for intercorporate investments changes financial statements and ratios
  CFA Level II · Financial Statement Analysis

  “Full goodwill raises assets and equity relative to partial goodwill, lowering return on equity.”

See also

Fair value · Goodwill · Non-controlling interest

Practise it

• Today's practice question One question, with every wrong option explained.
• Free Level I diagnostic test Twelve questions that show which topics to start with.
• Free finance calculators Check your arithmetic on the exam's core formulas.

All terms beginning with F · Glossary