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One of the notes are as follows:
Due to recent adverse publicicity concerning one of Subtrak’s major product lines, the goodwill which arose on the aquisition of Subtrak has been impaired by $500 000 as at 30 September 20X4. Goodwill impairment should be treated as Admin expenses.In the goodwill calculation in the revision guide, the impairment is not deducted? Why is this so? It is deducted in both the retained earnings and the NCI but not the goodwill. Why?
Many thanks
The reason is simple! Goodwill as at the date of acquisition is what it was calculated as
But recent (subsequent to date of acquisition) adverse publicity has caused that goodwill to be fully written off
So Dr consolidated retained earnings (parent’s share) and Dr NCI (their share)
… and that gets rid of any goodwill that arose on acquisition
OK?
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