justin88

nvestn wrote:
ff8789 wrote:
SpyAli wrote:
EQUITY METHOD:
Full Goodwill – Fair Value - BOOK Value of Net Identifiable assets (same under IFRS and US GAAP)
Equity reminds me of Book Value


ACQUISITION METHOD:
Full Goodwill – Fair value - Fair Value of Net Identifiable assets (same under IFRS and US GAAP)
Partial Goodwill – Purchase Price - Parents Proportionate share of Net Identifiable Assets (only under IFRS)
So its FF under Full goodwill and PPPP under Partial goodwill
[snip]
this is really helpful. thanks!
I honestly think that is wrong for the equity method part… IT IS NOT BOOK VALUE!!
Goodwill is goodwill, regardless of which way you report it. Goodwill is purchase price in excess of fair value of net identifiable assets. No questions.
Nvestn, you are correct.  Goodwill under the equity method is: Purchase Price - the Purchaser’s share of Fair Value of Net Identifiable Assets.  Another crucial step is that the difference between Fair Value and Book Value is assigned to items whose fair value exceeds book value.  If that item is PP&E for example or any other asset subject to depreciation, you must depreciate that excess value over its useful life.  This depreciation will reduce your reported income relating to that investment in subsequent years.  Make sense?