Your document headline

Goodwill should be measured after initial recognition at cost less any accumulated impairment charge.
Goodwill should not be amortized but tested at least annually for impairment in accordance with IAS 36.
A bargain purchase is a business combination in which the net fair value of the identifiable assets acquired and liabilities assumed exceeds the aggregate of the
consideration transferred, the noncontrolling interests, and the fair value of any previously held equity interest in the acquiree.
A bargain purchase might happen, for example, in a business combination that is a forced sale in which the seller is acting under compulsion. However, the
recognition and measurement exceptions for particular items might also lead to the recognition of a gain (or a change in the amount of a recognized gain) on a bargain
purchase (IFRS 3.35).
If, after applying the requirements ahead it is determined that the acquisition is a bargain purchase, the acquirer recognizes the resulting gain in profit or loss on the
acquisition date.
Before recognizing any gain, the Standard requires that the acquirer should reassess whether it has correctly identified all of the assets acquired and all of the
liabilities assumed. The acquirer should recognize any additional assets or liabilities that are identified in that review. The acquirer is then required to review the
procedures used to measure the amounts that IFRS 3 requires to be recognized at the acquisition date for all of the following:
1. The identifiable assets acquired and liabilities assumed.
2. The noncontrolling interest in the acquiree, if any.
3. For a business combination achieved in stages, the acquirer’s previously-held equity interest in the acquiree.
4. The consideration transferred.
The objective of the review is to ensure that the measurements appropriately reflect consideration of all available information as of the acquisition date.
Facts
CASE STUDY 5
Mark has acquired a subsidiary on January 1, 20X9. The fair value of the net assets of the subsidiary was $434 million. Mark acquired 70% of the shares
of the subsidiary for $429 million. The noncontrolling interest was fair valued at $136 million.
Required
Calculate goodwill using both methods allowed in IFRS 3.
Solution
Goodwill based on the two goodwill methods under IFRS 3 would be
Method 1
Purchase consideration 429
Noncontrolling interest (30% × 434)
130.2
559.2
Identifiable net assets-fair value (434)
Goodwill 125.2
Method 2
Purchase consideration 429
Noncontrolling interest
136
565
Identifiable net assets—fair value (434)
Goodwill 131
It can be seen that goodwill is effectively adjusted for the change in the value of the noncontrolling interest, which represents the goodwill attributable to
the NCI.