CERTYNEX IFRS ACADEMY

For a business combination in which the non-controlling interest is measured at the proportionate share, the analyst at Hêtre SA calculates goodwill as: consideration transferred less identifiable net assets. What is the error in this calculation?

Identifiable net assets must not be deducted: goodwill is the consideration transferred plus the non-controlling interest.

The non-controlling interest, measured here at its proportionate share of identifiable net assets, has not been added to the consideration transferred.

The non-controlling interest should have been added at fair value, the proportionate share being excluded from the goodwill calculation.

The calculation is correct: under the proportionate share method, the non-controlling interest does not enter the goodwill calculation.