Login Try Free

AASB Groups · Track 2 · Tutorial 1 of 3

Choose how to measure NCI in a business combination

Available on ProPremium

When the group buys control of a company but not all of it, AASB 3 lets you measure the non-controlling interest in one of two ways, chosen for each acquisition. The choice sets the NCI and the goodwill on the day of the purchase.

You will needThe new company in your hierarchy, loaded and mapped, as in Buy a new subsidiary. The NCI accounts set up, as in Account for minority shareholders.
By the endCompany F’s acquisition recorded with the NCI at fair value, and the goodwill and NCI agreeing with the purchase price allocation.

1Know the two choices

In September 2026, Your Group buys 80% of Company F for 960,000. The purchase price allocation values Company F’s identifiable net assets at 1,000,000, and the 20% the group didn’t buy at 230,000.

Buying 80% of Company F for 960,000, with net assets at fair value of 1,000,000: measured at its share of net assets the NCI is 200,000 and goodwill 160,000; measured at its fair value of 230,000, goodwill is 190,000
The same purchase, measured both ways.
Share of net assets (partial goodwill)The NCI starts at its percentage of the identifiable net assets — 20% of 1,000,000, so 200,000. Goodwill is only the parent’s: 160,000.
Fair value of NCI (full goodwill)The NCI starts at its own fair value, 230,000. Goodwill includes the NCI’s share: 190,000.

In both, goodwill is the investment cost plus the NCI less the net assets at fair value. The choice is made for each acquisition, so two subsidiaries in the same group can be measured differently. US GAAP allows only fair value; a group presenting under AASB can use either.

2Get the NCI’s fair value

The NCI’s fair value comes from the purchase price allocation, alongside the fair value of the net assets. It isn’t simply 20% of what the group paid for 80%: the price for control usually includes a premium the minority shares don’t carry. Here, 20% of the price would be 240,000; the valuation puts the NCI at 230,000.

3Record the acquisition

  1. Open Ownership & Equity → Ownership, and click Company F in Group structure.
  2. Under Share purchases and sales, click + Record, then Bought shares.
  3. Choose Your Group as Parent entity, Sep 2026 as the Month, 80 as the % transacted, and Subsidiary.
  4. Enter the Investment cost (960,000) and Net assets at date (fair value) (1,000,000), in the group currency.
  5. Under NCI measurement, choose Fair value of NCI (full goodwill), and enter the NCI fair value (230,000).
  6. Click Add Record.
Adding the ownership record for Company F: acquire 80% in September 2026 as a subsidiary, investment cost 960,000, net assets at fair value 1,000,000, NCI measured at fair value of 230,000
The measurement (1) and the NCI’s fair value (2).

NCI measurement appears only on the record that gives the group control. Leave it on Share of net assets (partial goodwill) to measure the NCI at its share of net assets; no fair value is then needed.

Then open Totals and accounts for this company and choose the investment and goodwill accounts, as in Buy a new subsidiary.

4Check the goodwill and NCI

  1. Open Company F’s Totals and accounts for this company.
  2. Open Reports → All Reports → Consolidated Statement of Financial Position for 2026.

Check

Acquisition goodwill shows 190,000. On the AASB statement, the goodwill account carries the 190,000 within non-current assets, and Non-Controlling Interests includes Company F’s 230,000 plus its share of Company F’s profit since September.

After the purchase, the NCI takes its 20% of Company F’s profit and other changes in equity in the same way, whichever measurement you chose. Only the starting amount differs.

5If something goes wrong

NCI fair value is required when NCI is measured at fair value.Enter the NCI’s fair value, or switch the measurement back to Share of net assets.
Net assets at date (fair value) is required for the acquisition that establishes control.Enter the net assets at fair value from the purchase price allocation.
NCI measurement isn’t in the dialogThe record doesn’t give the group control — for example, it is a later purchase in a company the group already controls, or it is set to JV / Associate.
Bargain purchase gain appears instead of goodwillThe investment cost plus the NCI is less than the net assets at fair value. Check the three figures against the purchase price allocation.
The goodwill is wrong after the valuation is finalisedEdit the ownership record with the final figures, and click Save Changes.

Want more detail? See the documentation

NCI — Non-Controlling Interest NCI Report Organisation Hierarchy
Next in Apply AASB in the consolidation Account for associates and joint ventures All tutorials