- This topic has 3 replies, 2 voices, and was last updated 7 years ago by
MikeLittle.
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mmensah
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Hi Mike,
The question is below
Horse acquired 100% of Cow at 1 January 20X8 for $20,000 when net assets were valued at $16,000. Impairment is calculated at 10% pa on a reducing balance basis.
What is the value of goodwill at 31 December 20X9 to be included in the consolidated statement of financial position?
Answer
Cost of investment $20,000
Net assets at acquisition $(16,000)
NCI (20% x $16,000) $3,200
Total = $7,200
Impairment 10% $(720)
Total= $6,480I dont understand where the solution managed to get 20% NCI? Horse acquired 100% of Cow right? So there should not be any NCI? Am I missng something?
MikeLittle
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Correct!
And goodwill is not allowed to be written off by way of an annual charge. It is subjected to an annual impairment review and it is totally inappropriate to impair on the basis of “10%pa on a reducing balance basis”
Whose question is this? It certainly isn’t one from any of opentuition’s material
mmensah
- Topics: 39
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Kaplan Material!! I have found a number of errors and spelling mistakes in the kaplan questions online! I will be writing a complaint because the errors can confuse students! The reducing balance part though me of as well!
Thanks
MikeLittle
- Topics: 26
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It’s not just the “reducing balance” bit – it’s also the “per annum” bit that is incorrect
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