Measuring the Goodwill Arising from a Business Combination
The revised IFRS 3 requires that goodwill is measured as the following:
The sum of:
the fair value of the consideration paid;
the amount of any non-controlling interest measured as described above;
the fair value of any previously held non-controlling interest in the acquiree;
the net sum of the acquisition date assets acquired and liabilities assumed, measured as required by IFRS 3.
It is important to note that goodwill itself is not measured at fair value—it is the residual amount that results from applying the calculation above. As a result of the option with respect to measurement of any non-controlling interest, the amount measured for goodwill may or may not include goodwill in such non-controlling interest.
1 Source: PricewaterhouseCoopers. “Acquisitions: Accounting and transparency under IFRS 3.” April 2004. Online at: www.pwc.com/fi/fin/ifrs/pwc_acq_acc_transp_ifrs3.pdf
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