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Please take two past exams:
June2013 and December 2011There are totally identical question regarding goodwill impairment BUT different methods of solving!
1) June 2013 in Parks goodwill they add unrecognized goodwill of NCI (53.30) and subtracted the SAME amount from total goodwill impairment.2) Dec 2011 when calculating Captive’s impairment I applied above method and got a result 46.2 BUT BAAAAM, was wrong!!! In the answers they added NCI goodwill (30.05) BUT deducted from total impairment 20% of it (that is 15.25 not initial 30.05).
So which calculation is accurate and correct?
Help! Exam date is coming and these inconsistencies make me nervous!
Without looking at the questions – about to leave to go to the airport – are the ncis in the two questions both on the same basis or is one proportionate and the other full fair value?
OK, in Trailer / Park, if you were to take 60% of the impairment (60% x 300.3) that gives us 180.2 and that’s the amount by which Trailer should be looking to impair. 80 of that amount is set against the goodwill and the remainder 100.2 goes against the retained earnings. That’s just a different way of looking at the same issue.
However, your main concern is why the printed solution has used 20% instead of 40%.
the answer is a very simple one! At the end of the year, the parent acquired half of the nci investment so, as at the year end, the parent’s interest was 80% and the nci was 20%. Throughout the entire year the nci had been 40% and that percentage as applied to the impairment calculation would have given you the 30.05 as in your post.It’s just a matter of the fact that there was a change in percentage holdings as at the last day of the accounting period
OK?
I found many such inconsistencies.
Sir Mike,can u pls tell me is this the right way of doing it for a proportionate qsTotal impairment * Parents holding %
Or is this correct
Total impairment-nci share of goodwill under proportionate(imaginary portion)=remaining for parent?
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