IFRS 3 revision

I was going through the impairment of goodwill treatment for both goodwill valued at fair value and proportionate of net assets method.

As always i have treated it as so:
Fair Value:
-Group reserves less Parent share of impairment
-NCI less NCI share of impairment
-Total goodwill less total impairment on face of Balance Sheet
-Total impairment charged to Profit and Loss Account under admin expenses
-NCI share of impairment charged to NCI in NCI’s share of profits in the Profit and Loss Account

Proportionate of subsidiary identifiable net assets Method:
-Charge whole of impairment to Group Reserves
-Charge whole of impairment to Goodwill on face
-No charge to NCI in profit and loss account or balance sheet.

However, in a technical article on impairment listed on the ACCA global website, the author has charged only parent’s share of impairment to the Group Reserves and to goodwill on face of the balance sheet. This was done when valuing goodwill at proportionate of net assets.

Pls explain if this is how we value goodwill impairment
Thanks,

P.S: Here’s the complete example quoted:

“At the year-end, an impairment review is being conducted on a 60%-owned subsidiary. At the date of the impairment review the carrying value of the subsidiary’s net assets were $250 and the goodwill attributable to the parent $300 and the recoverable amount of the subsidiary $700.

Required
Determine the outcome of the impairment review.

Solution
In conducting the impairment review of proportionate goodwill, it is first necessary to gross it up.

Proportionate goodwill Grossed up Goodwill including the
notional unrecognised NCI
$300 x 100/60 = $500

Now, for the purposes of the impairment review, the goodwill of $500 together with the net assets of $250 form the carrying value of the cash-generating unit.

Impairment review

Carrying value
Net assets $250

Goodwill $500
$750
Recoverable amount ($700)
Impairment loss $50

The impairment loss does not exceed the total of the recognised and unrecognised goodwill so therefore it is only goodwill that has been impaired. The other assets are not impaired. As proportionate goodwill is only attributable to the parent, the impairment loss will not impact NCI.

Only the parent’s share of the goodwill impairment loss will actually be recorded, ie 60% x $50 = $30.

The impairment loss will be applied to write down the goodwill, so that the intangible asset of goodwill that will appear on the group statement of financial position will be $270 ($300 – $30).

In the group statement of financial position, the accumulated profits will be reduced $30. There is no impact on the NCI.

In the group statement of profit or loss, the impairment loss of $30 will be charged as an extra operating expense. There is no impact on the NCI.

At the year-end, an impairment review is being conducted on a 60%-owned subsidiary. At the date of the impairment review the carrying value of the subsidiary’s net assets were $250 and the goodwill attributable to the parent $300 and the recoverable amount of the subsidiary $700.

Required
Determine the outcome of the impairment review.

Solution
In conducting the impairment review of proportionate goodwill, it is first necessary to gross it up.

Proportionate goodwill Grossed up Goodwill including the
notional unrecognised NCI
$300 x 100/60 = $500

Now, for the purposes of the impairment review, the goodwill of $500 together with the net assets of $250 form the carrying value of the cash-generating unit.

Impairment review

Carrying value
Net assets $250

Goodwill $500
$750
Recoverable amount ($700)
Impairment loss $50

The impairment loss does not exceed the total of the recognised and unrecognised goodwill so therefore it is only goodwill that has been impaired. The other assets are not impaired. As proportionate goodwill is only attributable to the parent, the impairment loss will not impact NCI.

Only the parent’s share of the goodwill impairment loss will actually be recorded, ie 60% x $50 = $30.

The impairment loss will be applied to write down the goodwill, so that the intangible asset of goodwill that will appear on the group statement of financial position will be $270 ($300 – $30).

In the group statement of financial position, the accumulated profits will be reduced $30. There is no impact on the NCI.

In the group statement of profit or loss, the impairment loss of $30 will be charged as an extra operating expense. There is no impact on the NCI.