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Goodwill impairment – NCI Share proportionate basis

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Goodwill impairment – NCI Share proportionate basis

  • This topic has 3 replies, 2 voices, and was last updated 8 years ago by MikeLittle.
Viewing 4 posts - 1 through 4 (of 4 total)
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  • August 26, 2016 at 8:31 am #335279
    satheesh90
    Member
    • Topics: 36
    • Replies: 25
    • ☆☆

    With respect to the treatment impairment of the goodwill, is there any difference exists between the cases of the NCI on proportionate basis and Fair value basis. This question is on the basis of the solution given in OT for the Example 5 of the chapter -10.

    In the solution , as the NCI is on the proportionate basis , the impairment of the good will is not at all charged to the NCI’s but it is fully charged to the Group’s Retained earning . If the NCI’s share was on the basis of Fair value, I thing the Goodwill impairment would have been charged proportionately (in the example 75 : 25) between group retained earning and NCI.

    Kindly confirm my understanding is correct ?

    August 26, 2016 at 3:34 pm #335349
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23315
    • ☆☆☆☆☆

    Your understanding IS correct

    Where NCI is valued on a proportionate basis, this means that the value of their investment is in direct proportion to their share of the fair valued net assets.

    And, of course, the fair valued net assets EXCLUDES any goodwill

    So, when NCI is on a proportionate basis, there is NO goodwill attributable to them and thus we cannot charge them with any impairment of goodwill

    OK?

    August 26, 2016 at 4:58 pm #335375
    satheesh90
    Member
    • Topics: 36
    • Replies: 25
    • ☆☆

    Thanks .. Absolutely OK

    August 26, 2016 at 6:17 pm #335404
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23315
    • ☆☆☆☆☆

    You’re welcome

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