Full Goodwill Based on the Cost of Acquisition vs. Full Goodwill Based on Value of Acquired Entity

Goodwill was recognized to the extent of acquirer’s interest for several decades. It was measured as difference between cost of acquisition and acquirer’s interest in the identifiable net assets of acquired entity at the date of acquisition. Consequently recognized goodwill does not represent total goodwill that includes also the part of goodwill corresponding to the noncontrolling interest. If the base for the quantification of the full goodwill would remain the cost of acquisition, there would be impossible to find satisfactory way to quantify that part of the goodwill relating to the non-controlling interest. It appears as consistent approach the quantification of the full goodwill based on the fair value of acquired entity as a whole. Current approach according to IFRS 3 and SFAS 141(R) represents hybrid way to measure goodwill.