Which method does IFRS permit for calculating noncontrolling interest?

Under IFRS, companies have the flexibility to choose between two methods for calculating noncontrolling interest (NCI) in a business combination: the full goodwill method and the partial goodwill method.

The full goodwill method includes the fair value of the entire acquired entity when recognizing goodwill, which means that NCI is measured at its fair value at the acquisition date. This approach reflects the total value attributable to both the controlling and noncontrolling interests.

On the other hand, the partial goodwill method calculates the NCI based only on the fair value of the NCI shares at the acquisition date, which results in a potentially lower amount of recognized goodwill because it does not consider the full fair value of the subsidiary.

This choice allows companies to align their accounting practices with their business strategy and the nature of the transaction. Such flexibility in selecting the method provides useful information tailored to the different circumstances of each acquisition.

The other options are not accurate because they imply restrictions on the methods available for calculating NCI under IFRS, whereas, in reality, both methods are permissible.