Goodwill Calculator (business combination, IFRS 3 method)

Understanding the goodwill calculator — concept and principle

This calculator measures goodwill in an acquisition using the IFRS 3 acquisition method, or a bargain purchase gain if the result is negative. Accountants and finance students use it to check purchase price allocations.

Paid more than the net assets — with the default inputs: $3,400,000.

How it is calculated

Net identifiable assets = fair value of identifiable assets acquired − fair value of liabilities assumed
Non-controlling interest (NCI), proportionate method = (1 − share owned) × net identifiable assets
NCI, fair value method = the fair value you enter
Goodwill = consideration transferred + NCI + fair value of any stake held before − net identifiable assets
If the result is negative, it is a gain on a bargain purchase
Goodwill as % of consideration = goodwill ÷ consideration × 100

The principle

A buyer usually pays more than the fair value of identifiable net assets, because the whole business, with its workforce and expected synergies, is worth more than its parts. That excess is goodwill. When the buyer owns less than 100%, IFRS 3 lets it measure the NCI either at its share of net assets, recording only the buyer's goodwill, or at fair value, recording full goodwill. A negative result is rare; the buyer must first re-check all values, then recognise the gain in profit or loss. Goodwill is not amortised under IFRS but tested for impairment every year.

Worked example

Defaults: consideration 9,000,000; identifiable assets 12,000,000; liabilities 5,000,000; 80% owned; NCI at proportionate share; no earlier stake.

Net identifiable assets = 12,000,000 − 5,000,000 = $7,000,000.
NCI = 20% × 7,000,000 = $1,400,000.
Consideration + NCI + earlier stake = 9,000,000 + 1,400,000 + 0 = $10,400,000.
Goodwill = 10,400,000 − 7,000,000 = $3,400,000; bargain purchase gain: —.
Goodwill as % of consideration = 3,400,000 ÷ 9,000,000 = 37.8%.

Each point is the calculator re-run with only “Fair value of liabilities assumed” changed; the gold point is the default example. Change the inputs above and this chart follows your numbers.

Fair value of liabilities assumed	Goodwill
1.25e+06	$400,000
2.5e+06	$1,400,000
3.75e+06	$2,400,000
5e+06	$3,400,000
6.25e+06	$4,400,000
7.5e+06	$5,400,000
1e+07	$7,400,000

How to read the result

A large share of goodwill means much of the price depends on future performance, so the risk of a later impairment is higher. The fair-value NCI method usually gives a larger goodwill figure.

Common mistakes

Using book values instead of fair values of assets and liabilities.
Forgetting the NCI when less than 100% is acquired.
Ignoring a previously held stake, which must be remeasured to fair value.

Keep in mind: Real purchase price allocations involve detailed valuations, contingent consideration and deferred tax. Use the result as a check, not as accounting advice.

Frequently asked questions

Is goodwill amortised?

Not under IFRS. It is tested for impairment at least annually; some other frameworks allow amortisation for certain entities.

What is a bargain purchase?

A deal where the price plus NCI is below the fair value of net identifiable assets; the difference is a gain.

What is the difference between full and partial goodwill?

Full goodwill measures NCI at fair value and includes the NCI's share of goodwill; partial goodwill records only the buyer's share.

Sources: IFRS Foundation, IFRS 3 "Business Combinations", paragraphs 32 and 34 · Grant Thornton Malaysia, "Insights into MFRS 3 — Recognising and measuring goodwill or gain from a bargain purchase" (2025)

Checked 9 Nov 2026. IFRS 3 “Business Combinations” (IFRS Foundation), paragraph 32 (goodwill = consideration transferred + non-controlling interest + fair value of previously held equity interest − net identifiable assets) and paragraph 34 (bargain purchase), as summarised in Grant Thornton Malaysia, “Insights into MFRS 3 — Recognising and measuring goodwill or gain from a bargain purchase” (2025; MFRS 3 is identical to IFRS 3).

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