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Hi Mike,
With regards to the goodwill attributable to the NCi in Kristina at $15,000;
Goodwill is impaired by 20% and the NCI share of the final goodwill impairment is $5,100.
This is more than 30%?
The total goodwill calculated of A in K, was 85,000 with a 20% impairment. But the question states $15,000 was valued for the NCI contribution of goodwill.
Does this not effectively mean the NCI will lose a lot more money?Is there any time in which the NCI would not have further impairment once their goodwill value has become fully impaired?
Hopefully I have wrote it in a way you can understand!
If TOTAL goodwill is 20% of 85,000, that’s equal to 17,000 of which the nci is to be charged with 30%
30% of 17,000 is ………????
I seem to remember a question where the nci share of the impairment was greater than the goodwill that had been attributed to them, but I can’t remember the question name
If the nci is valued proportionately (and it’s almost 100% that they won’t be) then we cannot deduct from them any goodwill impairment but we do have to go through a notional goodwill exercise in order to determine the extent of the impairment to be charged against the parent.
The reason why this is unlikely is because proportional valuation for the nci is unrealistic!
Ok?
Question states:
‘The directors of Anda had valued goodwill attributable to the NCI in Kristina at $15,000’The NCI holding was 30%.
Total goodwill is 85 with a 20% impairment: 17The goodwill impairment for the NCI is greater than the actual proportional share of the goodwill attributable to them.
Do I just ignore this? The goodwill impairment is only meant to impair up to the total of goodwill, not the overall investment, is it not?
I understand the Parents side, but here, the NCI is impairing at over 30% of the attributable goodwill, compared to the actual 30% overall impairment.
sorry, I meant the 20% overall goodwill impairment to the group, compared to 30% that has been attributable to the NCI only.
Diane, I’m not sure where you’re going with this 🙁
Total goodwill is $85,000 of which we are told $15,000 is attributable to the nci (so nci is NOT being valued on a proportional basis and therefore they are going to be debited with their share of the impairment
Ah, now I think I see whe you’re headed! You are thinking that if goodwill is being impaired by 20% then the nci should be being charged with 20% of their $15,000 and not their percentage shareholding of 30% of the goodwill
You’re thinking 20% of $15,000 and not 30% of $17,000
Oh Diane! This is an F7 point and I go over this soooo sloooowly in F7 lectures. I even comment on how “unfair” this appears but it’s what IFRS 3 revised tells us we must do!
Where nci is valued other than on a proportional basis then, when there is some goodwill impairment to be allocated, it’s allocated on the BASIS OF RESPECTIVE SHAREHOLDINGS
Seriously, this is an F7 point so you’ve got to get yourself into a happy state of mind that this is how we allocate goodwill impairments
If you’re still not happy, post again
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