1. 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

  2. Profile photo of maat9 says

    hello …sir in which situation we should charge the good will impaiment to NCI ..??
    because you said in previous lecture that we will not charge good wiill impairment to NCI …when the NCI is proportionate basis…..

    • Profile photo of MikeLittle says

      Correct – we only charge the nci with an impairment of goodwill when the nci is valued on a full, fair value basis. If they are valued on a proportionate basis, then they have no goodwill attributable to them, so we can’t charge them with any impairment

      • Profile photo of Natasha says

        Good day Sir,

        I am new on Open Tuition. Are there assigned times when you hold lectures?
        I have registered for F4 and F7.
        How does it work?

        Thank you


      • Profile photo of MikeLittle says

        Hi Natasha, welcome to the opentuition family :-)

        There are a number of lectures for all papers video recorded and a number of others which are audio recorded.

        We are all tutors active in teaching ACCA – opentuition is something we do in our spare time.

        There are no live lectures on the site, only recordings

        If you have any problems at all wih your studies, feel free to post your question on “Ask the tutor” and we will try to get back to you within 48 hours

        Good luck with your ACCA and tell your friends about the site!

      • Profile photo of Natasha says

        Thank you very much for your prompt response Sir.
        I was trying to find lectures for F4 (Global Variant) but it seems like there is only the English Variant available? :(

  3. Profile photo of latoyah says

    Hi Mike,

    Just worked Q-31 in the bbp kit. It has a Negative goodwill of $200.00 i see where they subtract from the admin expenses where i had just added it to the profits for the year.

    Please clarify: are there situations where i less it from expenses versus just adding it to the profit for the year?

  4. avatar says

    Is there anybody can answer my question ? Need help

    I am studying ACCA paper7 Financial Reporting (International and UK stream). I have paid online exam entry.
    I just have got one question when I needed to choose paper standard and variant because there are 3 options. I have chose “International” and I just wonder whether it is correct.


    • avatar says

      I’m the same and I chose Internatiional, as that is the syllabus that BPP teach where I was studying. If you are self studying there is no reason why you shouldn’t just do the UK variant – I have heard that it is slightly easier than international for some reason!

  5. Profile photo of henahailu2 says

    Goodwill impairment is allocated to both parent and non-controlling interest, valued at fair value.
    Let me pick a simple example from 2012 syllabus page 146-147.
    Goodwill 23,000.00
    Attributable to: parent 19,250.00
    NCI 3,750.00
    When goodwill is impaired by 20%, this impairment is allocated according to their percentage of holdings (75%: 25%)
    Impairment Parent (75%) NCI (25%)
    23,000.00 @ 20% = 4,600.00 3,450.00 1,150.00
    23,000.00 @ 75% = 17,250.00 12,937.50 4,312.50
    In this case the deduction of NCI resulted by goodwill impairment (4,312.50) is greater than the goodwill attributed (3,750.00).
    So, is it fair to allocate goodwill impairment according to percentage of holdings?
    My suggestion;
    Impairment Parent NCI
    23,000.00 @ 20% = 4600.00 (19,250.00 X 20%) = 3,850.00 (3,750.00 X 20%) = 750.00
    Does it make sense?

      • Profile photo of MikeLittle says

        Take the total goodwill (in your example it’s 23,000 x 20% = 4,600)

        Allocate on the basis of shareholdings (in your example that’s 75%/25%) so 3,450 for the parent and 1,150 for the nci

        Goodwill is now 18,400 and the retained earnings and nci have been reduced by 3,450 and 1,150 respectively.

        Yes, it’s unfair (apparently) as I point out in the lectures but …… that’s the way it is

  6. Profile photo of henahailu2 says

    the syllabus says “good will can not be developed internally, rather it is valued when business combination occurs”.
    so why do we attribute goodwill to NCI? where they do not develop goodwill internally?

    • Profile photo of MikeLittle says

      @henahailu2, The nci only arises on the event of a business acquisition. Incidentally, I believe that your question is incorrect “…good will can not be developed internally…” and then you go on to say “so why do we attribute goodwill to NCI where they do not develop goodwill internally?”

      The wording of your question suggests that we should not be attributing goodwill because it WASN’T developed internally.

      Where goodwill is internally generated, we DO NOT recognise it. Goodwill is recognised ONLY on the event of a business acquisition and nci arise, again, ONLY on the event of a business acquisition

    • Profile photo of MikeLittle says

      @simbamasara, They do! NCI is measured at “value at date of acquisition + share of post-acquisition retained – their share of goodwill impairment” The value at date of acquisition INCLUDES their share of goodwill at date of acquisition.

      An alternative way of calculating the nci is “their share of S net assets at date of Statement of Financial Position + their share of any goodwill which remains after impairments to date. Check it!

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