The different treatment of goodwill in consolidated financial statements
Under the merger of different theories, the accounting treatment of goodwill is not the same.
Treatment of the doctrine based on the parent company
Accounting Features:
1. Pro rata fair value of net identifiable assets and book value of the difference.
2. The book value of minority interests are recognized.
3. Calculated on the basis of goodwill is the parent company has a fair value of net assets of subsidiaries, not all.
Entity theory of accounting based on
Accounting Features:
1. All of the fair value of net identifiable assets and book value of the difference.
2. Minority interests in the fair value of the estimated total amount of confirmation.
3. Goodwill basis is the fair value of net assets of all subsidiaries share.
Under the current accounting treatment (the parent company theory and entity theory of the mix)
Accounting Features:
1. All of the fair value of net identifiable assets and book value of the difference.
2. Minority interests are recognized at fair value of identifiable net assets.
3. Calculated on the basis of goodwill is the parent company has subsidiaries all of the fair value of net assets, but not all.
