Goodwill Book Value Of Equity

Many companies have intangible value in patents trademarks brand name equity and trade secrets.

Goodwill book value of equity. Whatever value or part of the purchase price that cannot be allocated to a tangible asset gets added to an account called goodwill. These can all be valued and are put into a goodwill figure. Goodwill formula 100 million 12 million 0 110 million.

In most cases the former is higher than the latter resulting in goodwill being recorded. The formula for goodwill is. Company x acquires company y for 2 million.

Goodwill consideration paid fair value of non controlling interests fair value of equity interests fair value of net identifiable assets. It is calculated as the difference between the equity purchase price and the sum of the identifiable net assets or shareholders equity purchased. Goodwill equation consideration paid fair value of non controlling interests fair value of equity previous interests fair value of net assets recognized.

Therefore the goodwill generated in the transaction is 2 million.