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your lecture is great…..but my question is why the impairment of good will charged to NCI in first example.of the lecture…… and plz tell me when we charged the impairment of good will charged to NCI?
Where the nci is valued on a proportionate basis, they have no goodwill and therefore any impairment is all ours.
Of the nci is valued on a full fair value basis, they have some goodwill, so any impairment is allocated between the parent and the nci in the proportion of their different shareholdings.
Does that answer it?
i have get the point……… thanks to you sir……
at the end of answer why not nci has their part of god will impaired
Because, when the nci is valued on a proportionate basis there is NO GOODWILL (not God Will!) attributable to the nci. And if they haven’t got any goodwill, then how can you impair it!
Dear Sir, thank you very much for the lecture! It’s very helpful!
One question, I am not quite sure why we have to add NCI in the CS of FP if the parents company do not own their part of the sub.
It’s because they are partly responsible for financing the activities of the subsidiary. In addition, we add in the whole (100%) of the subsidiary’s assets and liabilities even though we don’t own 100%. We add the whole value because that’s what we control. The part that we don’t own (even though we do control 100%) is being financed by the nci. If we didn’t add in the nci, our Statement of Financial Position would not balance
Why EX5 on page 39 is so different from the note one? The note ex5 begins with Remigijus acquires 75%
Hi – I believe it’s because I amended the notes and have not re-recorded the lecture since that last note amendment
Mr Little, you have a nice sense of humour! : )
Good lectures. Thanks!
Same problem @ kionipc has.
Using the Course notes provided, there seems to be a discrepancy on page 39. There’s an entirely different question (Remigjius and Ilona) there but it is not the one referred to by the professor… can some direction be given as to where I can find the question the lecturer refers to during his lecture.
I am just working out the examples in chapter 7 but it seems the question you have on page 39 is different from the one I have on the same page
I have Remigijus and Ilona on page 39 not sure how that is or am I using a different set of notes
thanks! i understand already.
this was good. at first I could not understand how net assets of NCI were calculated but now my problem has been solved loud and clear
One of the best lecturer ever!!
Dear Mr. Little,
I figured it out now. Goodwill is calculated as at DOA so that is why no retained earning is included in the calculations.
@badmanbrian, but why, i still dont understand.
@loopheichuen, When a question says “….acquired on the date of incorporation ” that phrase is telling you that the date was the date that the company was “born”. The word “incorporation” in the context of company law is the act of creating a company.
So, if we acquire the shares on the date of the subsidiary’s incorporation, the subsidiary cannot have had any time to conduct business and therefore could not have accumulated any retained earnings as at the date of acquisition
@MikeLittle, omg it’s THAT simple? thanks!!! i understand now. but would it have been different if the word ”incorporation” is not there? if the word ”incorporation” is not there, i just do the usual calculation right? ie: add the $6000 in?
@loopheichuen, If the shares were not bought on the date of incorporation, then presumably the subsidiary will have amassed some retained earnings as at date of acquisition. So, normal working 2. But beware! Those retained earnings in working 2 are not likely to be the retained earnings as at the date of consolidation and we are looking for our share of the S post acquisition retained earnings
Question: Eg 5, the question states that “60% was acquired at the date of incorporation [01.01.2009] but the requirements is that we have to prepare consolidated FP as at 31.12.2009. Is not this 1 year, so why not include the retained earning of 6k in the goodwill cal.
its good material thanks.It would be more helpful if its availed to us in a downloadable settings because of different demanding circumstances, so that we can listen to these informative videos when when studying at appropriate place and not at the Internet cafe.please consider this.
on W3 of this eg 5 why havent we subtracted goodwill impaired since acq by 60% of 1000 as done in ur illustration before this example?
Mr Little please answer this question
@zelimkhan, Maybe it’s because the nci is valued on a proportionate basis? What do you think? Could that be the answer?
@MikeLittle, yep, it is. Ive already settled the matter. Thanks.
Nicely Clarified Sir, Thanks.
thank you so much sir…..its been very helpful….
you are so good sir thank you
very helpful tip, the abbreviations, will definitely save on already limited time.
i wanted to find out how to calculate nci using the proportionate method.I am never sure what to use
@rosemaryinonge, Hi Rosemary. Nci on a proportionate basis means that you will need to calculate the fair value of the subsidiary’s net assets as at the date of acquisition BEFORE you can put in the nci investment valuation in working 2.
So, set the working up woth the fair value of the consideration paid ( or to be paid ) by the parent on the acquisition.
Then leave a line for the value of the nci investment.
Leave another line so you have space to total the cost of the investment together with the nci value.
Set out the fair value of the subsidiary’s net assets as at date of acquisition. Total that figure and put it beneath where you will ( soon ) put in the total “value” of the subsidiary ie our cost + nci value.
The fair value of the subsidiary is then multiplied by the nci’s percentage interest in the subsidiary. Put that figure in line 2 of working 2.
Add the cost of the investment to the nci value ( which you have just put in ) and that gives us the “value” of the subsidiary as at date of acquisition!
Good Lecture. Thanks.
I like your method of teaching and your point where you said, we can abbreviate topics as long as it makes meaning to the entire exam writting. Thanks Steve.
The missing example is not included within the lecture, however if you follow the lecture you can then work through the example.
What is the answer for W2 Goodwill? I would like to double check please.
Goodwill would be $4,000 but after impairment of $1,000, the goodwill on the CSoFP would be $3,000
Yes the lecture works fine but this example which is explained is nowhere to be found in the course notes
There enough posts on this string – including an explanation by me! – as to why that example is no longer in the notes. However, the subject is fully covered in the lectures. If I remember this next season, I’ll re-record that lecture but, until then, you’ll just have to struggle and follow what is recorded without the notes being available. Sorry
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