I’ve seen different methods of calculating consolidated retained earnings. Some adjust as the P % share of the impairment losses and some use the full amount. Which is correct?
CIMA Forums
Impairment in Consolidated Retained Earnings
5y ago#1Hi,
Welcome to the forum.
The answer depends on how we measure the goodwill. If we use the full (fair value) method then the goodwill recognised in the group accounts is that of the parent and the NCI. Any impairment must therefore be allocated across both the Group Retained Earnings and NCI, i.e. P's share to the GRE and NCI share to the NCI.
If we use the partial method then the goodwill recognised in the group accounts is that of the parent only. Any impairment must therefore be allocated to the GRE in full, i.e. 100%. None is taken to the NCI as none of their goodwill is recognised in the group accounts under this method.
Hope that helps.
Thanks
Sign into reply to this topic.