IFRS3 Technical Article

It looks like the impairment loss in scenario 1 is $250 ($700 - $450) and that should be allocated against the goodwill figure first to eliminate it in full leaving zero goodwill. The remaining $50 should be allocated to the other net assets In scenario 2, there is no goodwill attributable to the nci - their valuation is proportionate to their share of the identifiable net assets (20% x $500) but we need to apply the concept of notional goodwill. In the case in the question the nci own 20% and the parent 80%. The argument goes that if 80% holding has $160 goodwill attributable, then a 20% holding must have notional goodwill of $40 The investment in the subsidiary is $560 from the parent and $100 from the nci - a total of $660 and together with the notional goodwill that gives a total of $700. The recoverable amount is now down to $550 - a fall of $150 This amount should be allocated in the ratio 80/20 to write down the goodwill and notional goodwill first of all So 80% x $150 = $120 against the $160 goodwill attributable to the parent leaving $160 - $120 = $40 and ... oh! The nci has only notional goodwill attributable to them. So allocate a notional $30 (20% x $150) against the nci's notional goodwill figure of $40 bringing that down to $10 ... but that notional $10 does not appear anywhere in the financial statements! It's notional. It's a pretend value The idea behind this is to restrict / calculate the amount of goodwill impairment to the parent's relative share where the nci has been valued on a proportionate basis Is that anywhere close to the article answer?