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Sir I’m having difficulty in understanding why the impairment of g/w on the retaining earnings b/f is $27,375. The g/w is impaired by 75% resulting in a good will impairment of $27,375, but why wouldn’t we impair the retained earnings by our share of the impairment on acquisition i.e 75%*$27,375= $20,531.
Acquisition date was 1 July, 2001 and we’re consolidating for the year ended 30 June, 2009 – so 8 years after acquisition
During those 8 years the cumulative impairment of goodwill had been 75% so that amount (75% x $36,500) has been written off the retained earnings figure brought forward and now the remaining $9,125 (25% x $36,500) is to be written off this year’s retained earnings so that, cumulatively the full $36,500 has been written off by the time we are preparing the figure for consolidated retained earnings for the statement of financial position
If you think about it, it is not at all sensible to write off goodwill (that arises on acquisition) against the balance for retained earnings as at date of acquisition (ie achieved before acquisition)
If your question is asking why we have not apportioned the goodwill impairment (“why wouldn’t we impair the retained earnings by our share of the impairment”), it’s because the goodwill relates entirely to Didzis because, in this example, the nci is valued on a proportionate basis and has no goodwill attributable to them
OK?
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