How to calculate goodwill for an investment under the equity method?
Goodwill is calculated as the difference between the purchase price and the fair-market-value (“FMV”) of the net identifiable assets acquired (i.e. equity or assets – liabilities).
Example: Boobaloo acquired a 30% stake in Hooli for $200,000. At the time of purchase, the fair market value of Hooli’s net identifiable assets was $600,000.
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