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I think I’ve gotten mixed up.
Re-watching some of the lectures, going back to FR level – I see actually the whole goodwill impairment charge (of £20k) is allocated to the Subsidiary’s column in the SPL Consolidation workings (8:20 onwards – https://opentuition.com/acca/fr/group-spl-example-mya-acca-financial-reporting-fr/).
Not just the NCI portion (of 20%), the whole amount.
At the end of the computation, when the NCI’s portion of the profits is calculated, the impact of the 100% goodwill impairment charged to the subsidiary will be split between the NCI and the Group, as the group will get it’s 80% of the impairment in the form of reduced profits from the subsidiary, whilst the NCI will keep it’s 20% in it’s share of the subsidiary profits.
I think previously, I was expecting the split of the goodwill impairment to occur in the top part of the computation i.e instead of 100% going to S’s column, S should only get 20% whilst the P column gets 80%.
I feel like I’m 90% there
The way I think of this particular scenario, does the contract give you access to the object or does it give you access to the functionality/service the object provides?
If the contract gives you access to the object, to which you can do whatever you wish (i.e you can use it or leave it in a garage doing nothing, it’s your call) – then it is a lease.
If the contract gives you access to the functionality or service the object provides, then your focus is on the output of the object – not necessarily the object itself. This is not a lease. The means of achieving the output does not matter as much as the output itself, which is all you are concerned about. Because of this, the Lessor is able to substitute the object, it doesn’t affect what you are entitled to, or what you get. This is not a lease.
With the question, Calendar gets the right to a specific aircraft. He can do with it what he wishes, i.e fly it or store it in a garage. He is not getting the right to fly from one place to another (i.e the output of an aircraft).
The substitution of the aircraft mentioned in the question, for me it’s more simply to replace the original aircraft if it’s broken, not a means to provide what is agreed in the contract. The lessor cannot change the aircraft Calendar has, under ordinary circumstances, as he has the right to a specific aircraft.
All of this is insignificant to Stephen’s emphasis that understanding of the definition is more important than ‘correctness’ of the answer
