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Dear sir,
According to page 23 of the notes, Illustration on Subsidiary Impairment (Partial Goodwill), it states that 7 million relates to NCI & cannot be processed as an adjustment. The subsidiary impairment is 40 million in total, and the NCI’s share is 20%. How do you get 7 million???
20% of 40m = 8 million so why take 7 million??? Is that an error in notes?
And left out impairment is 40 – 8 = 32 million. Right?Sir i would appreciate if you can make a video explaining Subsidiary impairment (partial goodwill). Its really confusing. Currently there is no video on that.
Thanks.Initially we pretend to gross up goodwill by 7 from 28 to 35.
Loss is 40.
35 is allocated against goodwill – but in fact we can only credit goodwill with the figure on the ledger which is 28
So 5 is allocated against other assetsJournal
CR OTHER ASSETS 5
CR GOODWILL 28 –
DR P&L 33It’s a very hard point and I always tell students not to waste time on it.
How do you get 33 million at first place? Impairment loss is 40m and NCI’s share is 20%, so left out impairment loss is 40m – 20% = 32m.
So
Dr. P/L 32
Cr. Goodwill 28
Cr. Other assets 4Right?
We are using proportionate / partial goodwill – so losses are not allocated to NCI.
It’s a difficult point but, to get it right, you need to follow the steps in the notes.
Sir there is a technical article related to impairment of subsidiary which has a similar question using partial goodwill. And in that they have explained clearly that parents share of impairment needs to be considered and not NCI.
They have separated NCI’s share and have taken only parents share.
you can have a look at that.
Similar question with different method to what you have given in the notes.
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