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Basic group accounts (F1 revision)

2.3 Methods of calculating NCI within goodwill

Two methods of calculating goodwill are allowed:

 the proportionate method (P’s GW only)

 the fair value method (100% of GW – P’s and NCI’s GW).

The calculations are given below.

Proportionate Fair value
method method
Cost of investment x x
NCI at acquisition

NCI % × S’s NAs at acquisition x FV of NCI at acquisition x

less

Subs NAs at acquisition (x) (x)
–––– ––––

GW at acquisition x x
–––– ––––

NB. Only the NCI at acquisition line has changed between the
methods. The NCI at acquisition within the goodwill calculation will
always be used in the NCI working (W4).

Impairment of goodwill

 Using proportionate method – relates to P only so take all to
group retained earnings (W5).

 Using FV method – relates to both the P and the NCI.

Split using % to NCI working (W4) and group retained earnings (W5).

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