To calculate Non-Controlling Interest (NCI) using the partial goodwill method, you will need to first determine the total value of the subsidiary company. This is typically done through a valuation process that takes into account a variety of factors, such as the company's assets, liabilities, and earnings potential.
Once you have determined the total value of the subsidiary, you can calculate the percentage of the company that is owned by the parent company. This is typically expressed as a percentage of total shares outstanding or as a percentage of total equity in the subsidiary.
Next, you will need to determine the fair value of the non-controlling interest. This is typically done by taking the total value of the subsidiary and subtracting the value of the parent company's share. The resulting amount represents the fair value of the non-controlling interest.
Finally, you will need to adjust the fair value of the non-controlling interest to reflect any goodwill that is not attributable to the parent company. This is typically done by subtracting the portion of goodwill that is attributable to the parent company from the total goodwill of the subsidiary. The resulting amount represents the partial goodwill that is attributable to the non-controlling interest.
The formula to calculate Non-Controlling Interest (NCI) using the partial goodwill method can be expressed as:
NCI = (Total value of subsidiary - Value of parent company's share) x (1 - Goodwill attributable to parent company / Total goodwill)