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Greetings Mike,
Just wanting to know which lecture I should watch to understand when the fair value of the asset is below its carrying amount and how it is treated about depreciation , C.R.E. and in calculation of goodwill .
I have seen the fair value measurement video, but it does not explain that sort of scenario.
Many thanks in advance.
I believe that it’s what I tend to dismiss as “common sense”!
In the goodwill calculation, put in the fair value adjustment but this time it’s a downwards adjustment
In the consolidated statement of profit or loss, depreciation will have been charged on the original, unadjusted amount and that would therefore be an overcharge of depreciation. So, in the workings for consolidated retained earnings you will show (1) as a deduction the devaluation of the asset as at date of acquisition and (2) as an addition to the subsidiary’s retained earnings you will show the amount by which the subsidiary has overcharged depreciation in the post acquisition period
In the consolidated statement of financial position, include the revalued, impaired asset at its reduced fair value
OK?
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