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How to Calculate Goodwill.
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How to Calculate Goodwill.

Rosemary Njeri

Goodwill in accounting is an intangible asset that arises when a buyer acquires an existing business.

The goodwill of a company increases its value, as qualities such as the company’s customer base, its brands, products, location, workforce, and reputation demonstrate the company’s proven track record of generating income.

Formula to calculate goodwill.

How to Calculate Goodwill.

Example:

Suppose a company’s financial statement was as follows:

Consideration Paid$20,000
Fair value of non-controlling interests$50,000
Fair value of equity previous interests$70,000
Fair value of net assets recognized$30,000

Calculate the company’s goodwill cost.

How to Calculate Goodwill.

Therefore, the company’s goodwill is $110,000.

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