When calculating Goodwill, do you always deduct the difference in fair value of PPE and book value of PPE (assuming these are off-BS leases)?? The CFA practice question below does not do this…
Note the BS shows a difference between FV of PPE and BV of PPE for this example…
When calculating Goodwill we will always use the fair value of the (identificable)net assets we have purchased.
The is the partial method
Amount paid for stake - %of assets purchases at FV = 80 - 25% x 295 = 6.25
Full goodwill
Market value of co. purchases (based on price you paid) - FV of assets
80/25% - 295 = 25
When calculating Goodwill, do you always deduct the difference in fair value of PPE and book value of PPE (assuming these are off-BS leases)?? The CFA practice question below does not do this…
Sorry I don’t have the rest of the question
*But if a assume *
Book value of of assets were 270
*Fair Value of assets = 295 *
Difference = 25
P.Goodwill
80 - 25% (270 + 25) = 6.25
*80 - 25% x 270 - 25% x 25 *
So I think the answer is deducting the difference in BV and FV of assets it is just presenting it differently
