Hi
What's the logic behind charging impairment on goodwill to both NCI and R.Earnings when NCI is measured using the Fair value method but impairment on goodwill is only charged to retained earnings when using the proportion of net asset method to measure NCI. Grateful if you could explain why this is the case?
Thanking you in advance
ACCA Forums
SBRFV vs proportionate method lf measuring NCI
Thats because when using fair values, a share of goodwill is also attributed to the NCI. So if NCI have a share in goodwill calculated on acquisition, they should also bear any impairment equal to their share in net assets.
On the other hand, when NCI is calculated using proportionate method, no goodwill is attributed to NCI and hence no impairment is charged.
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