SS# 6: Acquisition Method - ROE

[Steely Dan]

Under the full goodwill method, will equity always be higher than than the partial goodwill method? I think so, since noncontrolling interest is a part of equity and that’s always bigger with full goodwill, correct? Therefore won’t ROE be lower under full goodwill?

 

[AndrewUNH]

Yes I think you’re right. Net Income is the same. So same numerator, higher denom equals lower ROE.