2009 Dec Grange Question

Dear all

Q:(iii) On 30 June 2008, Grange had acquired a 100% interest in Sitin, a public limited company, for a cash consideration
of $39 million. Sitin’s identifi able net assets were fair valued at $32 million.
On 30 November 2009, Grange disposed of 60% of the equity of Sitin when its identifi able net assets were
$36 million. Of the increase in net assets, $3 million had been reported in profi t or loss and $1 million had been
reported in comprehensive income as profi t on an available-for-sale asset. The sale proceeds were $23 million
and the remaining equity interest was fair valued at $13 million. Grange could still exert signifi cant infl uence after
the disposal of the interest. The only accounting entry made in Grange’s fi nancial statements was to increase cash
and reduce the cost of the investment in Sitin.

it is noted in this question the new investment in Sitin (cost) should be 13m, raising the impairment loss of 3m (16m-13m).
i think the entry should be recorded as follow:
Dr: RE (Grange)
CR:investment in Sitin
The impairment loss test demonstrates this point:
862+2-7+4-3(impairment)=858 858-830=28 impairment loss.
Dr:RE (Grange)
Cr:PPE
I wonder why 3m of impairment loss is excluded in calculation of RE of Grange. The calculaion of RE only deduct the 28m impairment loss.

If you have any advice, please tell me.
Thanks