1. avatar says

    Thanks a lot for the good work you are doing. Please I need a little explanation. Why don’t we share impairments of goodwill according to the percentage of goodwill owned by both NIC and controlling interest but rather do it according the ownership of the subsidiary. For instance in a 60%/40% ownership we are told the goodwill of the NCI is 2000 and after calculating goodwill you have 35000 as goodwill which is supposed to be impaired by 10%. Why not calculate impairment attributable to the NIC as 10% of 2000 since that is what they owned as goodwill and 10% of 33000 as impairment attributable to holding company but rather we take 40% and 60% of the total impairment?

    Anyone with an explanation could help me.

    • Profile photo of MikeLittle says

      Good question! It’s something I talk about in lectures. And quite honestly, I don’t know. There is an inherent feature of the rule in that it is open to major abuse – the directors assess goodwill attributable to the 40% nci as just $100 where total nci is $50,000. Now impair by $10,000

      Nci share is $4,000 and parent share is just $6,000

      Yet “fairly”, the allocation would be $20 / $9,880

      Hmmmm! Good question

      The reason why we allocate on a share holding basis? Because that’s what IFRS 3 revised says that we must do


  2. avatar says

    Hi I have a question with regards to goodwill : according to the revised IFRS .will it be be correct to calculate goodwill for both CI and NCI and add the two (less impairment ) in the consolidated statement of financial position ? As goodwill under non – current asset?
    Or am only supposed to include the CI good will?

    • Profile photo of MikeLittle says

      Please post questions like this on the Ask the Tutor forum in future. Thanks :-)

      In CSofFP the goodwill value is shown as in working W2 according to MY method of setting out workings (BPP and Kaplan do their workings differently than I)

      So the goodwill as calculated in W2 is the figure that features and therefore includes any goodwill attributable to the nci

      Hope that helps

    • Profile photo of MikeLittle says

      Goodwill is not impaired at a certain percentage each year – that would be amortisation and we left that as a principle some time ago.

      Instead of amortising, directors are nowadays required to consider whether goodwill should be impaired this year and, if so, by how much

      So your question isn’t valid and I cannot answer it!

    • Profile photo of MikeLittle says

      It’s the value of the nci at date of acquisition. Sometimes the examiner will tell you the value. Sometimes he says it’s proportionate, sometimes he’ll tell you the value of the goodwill attributable to the nci and sometimes he’ll say that the subsidiary share value is a fair value for the purposes of calculating the nci value of their investment


      • Profile photo of albertabediacca says

        sorry for disturbing you big mike,but what do you do when its proportional? do you multiple the sum of the subsidiaries equity share and retained earnings by the holding companies acquired percentage?? Thanks so much

      • Profile photo of albertabediacca says

        Michael my problem seem to be with the example 5 in chapter 7.i can’t see how to get 23,000 for that calculation please help me out.thanks for the immediate reply

      • Profile photo of albertabediacca says

        Oooh big mike i just got it.i just had to add the 60,000 to the 32000 and multiple by the subsidiary’s easy. sorry for bothering you.

        Thank you

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