Business mergers are an integral part of the modern economy. As the economy develops rapidly, so do companies more prone to business mergers. The reasons for business combinations are: strengthening the market position of entities, faster and easier progress and higher profitability and increasing the present value of entities. Business combinations are realized by purchasing an asset or ownership interest, ie a business combination is a transaction or other event by which the acquirer acquires control over one or more operations. If a business combination occurs, the parent company is required to prepare and present consolidated financial statements. However, when preparing consolidated financial statements, it is necessary to eliminate transactions that have occurred between the parent and subsidiaries. The topic of this paper is the recognition and measurement of goodwill in the consolidated financial statements. Goodwill as a result of a business combination represents the positive difference between the acquisition fee and the fair value of the net assets of the acquired entity or business. Goodwill is recognized as an asset, ie a long-term inatngible asset. Unlike goodwill, a profit from a bargain purchase represents a negative difference between the acquistion fee and the fair value of the net assets of the acquired entity or business. Goodwill represents future economic benefits, and the gain on a favorable purchase is immediately recognized as revenue, that is, it represents the current economic benefit to the acquirer. The aim of this paper is to present the process of determining goodwill in the business combination and to show the recognition of goodwill in the consolidated financial statements.