How does the impairment of goodwill affect nci

If you use the “traditional method”
so, the impairment will reduce the value of goodwill and reduce the retain earning of the Parent, regardless of the NCI

IF you use the “fair value method”
so, the impairment will reduce the value of goodwill, and
1) reduce the retained earning of the Parent
2) reduce the value of NCI.

Example: A own 90% B
Goodwill at acquisition day is 10mil, at the year end, they point out the goodwill only have value of 5 mil, so, the impairment goodwill = 5mil
so the goodwill present in consolidate f/s is 5mil
The post profit B earn is year is 100mil
So 90% = 90 mil go to the retain earning of Parent A
and 10%= 10mil go to the retain earning of NCI
impairment goodwill = 5 mil

so it will charge 5*90% = 4.5mil in the retained earning of A ,

so the group retain earning = the retained earning of A at year end + the 90% post profit attribute to A – 4.5mil impairment GW

and the 0.5 mil will be charge to NCI, the value of NCI = the fair value of NCI at acquisition day + 10% post-profit attribute – 0.5 impairment GW

Amr Fetiha, there will never be a situation where the examiner doesn’t tell you.

Zaca, these pages are titled “Ask the tutor” I bit my tongue when you answered Cara’s post, but this second time you have transgressed, I feel it necessary to remind you that you are NOT the OpenTuition tutor and the questions are therefore NOT addressed to you

The site welcomes the involvement of students in the general forum and actively encourages such involvement but please, in the future, restrict your posts to answering questions in that general forum

Many thanks

The FULL amount of the impairment comes out of the consolidated statement of income.

The nci entitlement to their share of this year’s subsidiary profits is calculated in working W4b

OK?

Good!

🙂