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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 ?
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?
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