Goodwill Calculator — Business Acquisition Accounting
Goodwill is the premium paid in a business acquisition above the net fair value of the identifiable assets. Enter the total purchase price and the fair values of acquired assets and assumed liabilities to find the goodwill — or a bargain purchase gain if the price is below net asset value.
Intangible premium paid above the net fair value of identifiable assets
$5,000,000
Total priceNet identifiable assets
50%
Goodwill
50%
- 1
Net identifiable assets
3,500,000 − 1,000,000 = 2,500,000Fair value of assets minus fair value of assumed liabilities. - 2
Goodwill
5,000,000 − 2,500,000 = 2,500,000
How does this calculator work?
Accounting goodwill = Acquisition Price − (Fair Value of Assets − Fair Value of Liabilities). It represents unquantifiable value like brand and customer loyalty, sits as an intangible asset under IFRS 3 and ASC 805, and is tested annually for impairment rather than amortised. A negative result is a rare bargain purchase gain.
Formula
How this is calculated
When one company acquires another, the purchase price often exceeds the sum of the fair market values of all identifiable tangible and intangible assets minus any liabilities assumed. That excess is recorded as goodwill — an intangible asset on the balance sheet representing things like brand reputation, customer relationships, and assembled workforce that are real but cannot be individually measured and separated.
Under both IFRS 3 (Business Combinations) and US GAAP ASC 805, goodwill is calculated the same way: Goodwill = Purchase Price − Net Identifiable Assets, where Net Identifiable Assets = Fair Value of Assets − Fair Value of Liabilities. After recognition, goodwill is not amortised under IFRS or US GAAP; instead it is tested annually for impairment.
If the purchase price is below net identifiable asset value, the result is a "bargain purchase" and the difference is recognised immediately as a gain in profit or loss. This is rare and typically signals either a distressed seller, measurement errors in the fair value estimates, or an exceptionally good deal. Auditors scrutinise bargain purchases carefully before allowing the gain to be booked.
Frequently asked questions
Goodwill is an intangible asset on the acquirer's balance sheet. It represents the premium paid for unidentifiable value such as brand strength, customer loyalty, and synergies expected from the combination. It is not amortised under IFRS or US GAAP but must be tested for impairment at least annually.
If the carrying value of the reporting unit falls below its recoverable amount, goodwill is written down to its recoverable value and an impairment charge is recorded in profit or loss. Impairment losses cannot be reversed under either IFRS or US GAAP.
The core formula — Goodwill = Price − Net Fair Value of Identifiable Assets — is the same under IFRS 3 and ASC 805. There are differences in how non-controlling interest and partial acquisitions are handled. This calculator assumes a full acquisition at a single price; consult a CPA for partial-acquisition or step-acquisition scenarios.
Also known as
TG we-Calculate Editorial Team. (2026). Goodwill Calculator — Business Acquisition Accounting [Online calculator]. TG we-Calculate. https://we-calculate.com/calculator/goodwill-calculator
TG we-Calculate Editorial Team. "Goodwill Calculator — Business Acquisition Accounting." TG we-Calculate. 2026. https://we-calculate.com/calculator/goodwill-calculator.
TG we-Calculate Editorial Team, "Goodwill Calculator — Business Acquisition Accounting," TG we-Calculate, 2026. [Online]. Available: https://we-calculate.com/calculator/goodwill-calculator
@misc{wecalculate_goodwill_calculator, title = {Goodwill Calculator — Business Acquisition Accounting}, author = {{TG we-Calculate Editorial Team}}, howpublished = {\url{https://we-calculate.com/calculator/goodwill-calculator}}, year = {2026}, note = {TG we-Calculate} }
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