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Grossed notional goodwill is impaired.
Is it correct to minus say 90% from goodwill cal and say 10% from NCI or directly from goodwill only whislt DR group retained earnings?
Hi,
The treatment will depends on the method used
1) proportionate method
2) fair value or full goodwill method
,with reference to your example given it is is full goodwill method in this case you can deduct the total from the full goodwill or you can apportion it on their %age of share holding and also deduct parent’s portion only from group retain earning and NCI %age from NCI share of earning
Example
P acquired 80% of S when the net assets of S at acquisition were $1000 and cost of investment was $1500. Goodwill was impaired by $100. The fair value of NCI at that date were $500.SOLUTION
GOODWILL
cost of investment 1500
P’s share of net asset @ acquisition(80%* 1000) (800)
goodwill for P’s 700
NCI FV @ acquisition 500
NCI share of net asset @ acquisition(20%*1000 (200) 300
full goodwill b/4 impairment 1000
less impairment 100GROUP EARNINGS
P’s profit *******
P’s share of S post acquisition profit (80%) *******
less impairment (80%*100) $80NCI
NCI’s share of S net asset @ reporting date ******
Goodwill for NCI(500-300) 200
less impairment (100* 20%) (20)CR. goodwill $100
DR group earning $80
DR NCI $20@coolbam said:
Grossed notional goodwill is impaired.Is it correct to minus say 90% from goodwill cal and say 10% from NCI or directly from goodwill only whislt DR group retained earnings?
Please tell the exact question. Which book have you quoted it from, page number, etc.? Your question is not clear to me.
Hi
you will deduct the total from the goodwill and group earnings if only it is PROPORTIONATE METHOD
NOTE but if it is FAIR VALUE METHOD then you must apportion it between group earnings and NCI
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