# Calculating Goodwill (DFS)

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Registered Posts: 10 New contributor ๐ธ
Hi all,

just stuggling a little calculating goodwill for a consolidated Balance Sheet, can anyone explain how to do this please?

Thanks

• Registered Posts: 2,453 Beyond epic contributor ๐งโโ๏ธ
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I'm sure someone will give a better explanation soon, but:

You calculate the percentage for the parent company, based on the acquired shares.
(acquired shares divided by total normal shares times 100 or written as a fraction)

You add up the following, based on that percentage:
Acquired share capital
Acquired retained earnings
Acquired part of the revaluations, if any

From the original investment amount (usually given as investment in the SoFP) you deduct the total of the above.
This gives the goodwill for the time of purchase.
Depending on how long ago this was, you calculate the impairment of goodwill and deduct this from the goodwill at the time of purchase.

The result is the goodwill which goes directly to non-current assets of the SoFP.

Hope this helps,
Rinske
• Registered Posts: 734 Epic contributor ๐
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Hi all,

just stuggling a little calculating goodwill for a consolidated Balance Sheet, can anyone explain how to do this please?

Thanks

i am about to go through this. did you want help on it all or just goodwill
• Registered Posts: 711 Epic contributor ๐
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look at the thread I have just upped about 'consolidated accounts and goodwill' Clare Fitch explains it really well.
• Registered Posts: 734 Epic contributor ๐
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right as Rinske has put everything, i will too as writing it will help get it into my head. You should also search the forum for similar stuff.

Step 1. establish the control
Step 2. Work out the net assets of the subsidiary. this includes the share capital and retained earnings at both the date of aquisition and the SOFP date
Step 3. Goodwill on aquisition. This is the cost of shares acquired less the share of net asets at acquisition (from step 2) it is here any impairment is deducted
Step 4. Non controlling interest. Share of net assets at aqusition x subsidiary share
Step 5. Group retained earnings. This is parents reserve + subsidiary group share of post acquisition reserves - goodwill impairment

hope that helps. maybe that will get it to sink into my head too