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As per ACCA Technical Article:
“If the total amount of impairment loss exceeds the amount allocated against recognised and notional goodwill, the excess will be allocated against the other assets on a pro rata basis. This further loss will be shared between the parent and the NCI in the normal proportion that they share profits and losses.”
Should the journal entries then read?
Dr Group profit or loss 32
Dr NCI 1
Cr Goodwill 28
Cr Net assets 5Loss allocated to goodwill
Dr P&L Cr Goodwill
Loss allocated to non current assets
Dr P&L Dr NCI Cr PPE etc
Excuse me again, so is this therefore correct?
Dr Group profit or loss 32
Dr NCI 1
Cr Goodwill 28
Cr Net assets 5As compared to the answer in the notes:
Dr Group profit or loss 33
Cr Goodwill 28
Cr Net assets 5Thanks in advance.
Good one 🙂
The notes show what happens to the assets and that a charge of 33 will be recognised in the P&L.
But you are correct – in calculating NCI (at the bottom of the P&L, an adjustment will be made as the NCI must bear their share of the 5.
I’ll have to think about how to incorporate that into the next edition of the notes without increasing student confusion!
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