Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › How does the impairment of goodwill affect nci
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- April 7, 2014 at 11:39 am #164614
In what cases does impairment of goodwill affect NCI?
In case of statement of financial position or P/L.
And in cases of valuation of NCI at either fair value or proportionate share of the fair value of the subsidiary’s net assets.April 7, 2014 at 11:54 am #164616If you use the “traditional method”
so, the impairment will reduce the value of goodwill and reduce the retain earning of the Parent, regardless of the NCIIF you use the “fair value method”
so, the impairment will reduce the value of goodwill, and
1) reduce the retained earning of the Parent
2) reduce the value of NCI.Example: A own 90% B
Goodwill at acquisition day is 10mil, at the year end, they point out the goodwill only have value of 5 mil, so, the impairment goodwill = 5mil
so the goodwill present in consolidate f/s is 5mil
The post profit B earn is year is 100mil
So 90% = 90 mil go to the retain earning of Parent A
and 10%= 10mil go to the retain earning of NCI
impairment goodwill = 5 milso it will charge 5*90% = 4.5mil in the retained earning of A ,
so the group retain earning = the retained earning of A at year end + the 90% post profit attribute to A – 4.5mil impairment GW
and the 0.5 mil will be charge to NCI, the value of NCI = the fair value of NCI at acquisition day + 10% post-profit attribute – 0.5 impairment GW
April 7, 2014 at 2:27 pm #164634I got it thank you.
But what if the examiner didn’t state the method used in measuring NCI in preparing statement of P/L. Which method should I use?April 7, 2014 at 3:37 pm #164649Amr Fetiha, there will never be a situation where the examiner doesn’t tell you.
Zaca, these pages are titled “Ask the tutor” I bit my tongue when you answered Cara’s post, but this second time you have transgressed, I feel it necessary to remind you that you are NOT the OpenTuition tutor and the questions are therefore NOT addressed to you
The site welcomes the involvement of students in the general forum and actively encourages such involvement but please, in the future, restrict your posts to answering questions in that general forum
Many thanks
April 8, 2014 at 6:48 am #164702Okay. how to deal with impairment of goodwill in P/L?
April 8, 2014 at 11:11 am #164748The FULL amount of the impairment comes out of the consolidated statement of income.
The nci entitlement to their share of this year’s subsidiary profits is calculated in working W4b
OK?
April 8, 2014 at 11:58 am #164760Ok.
April 8, 2014 at 3:53 pm #164783Good!
🙂
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