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hi,
could some explain for me how to get the figure of impairment loss ( given in qus as 10% of the goodwill)
Example 3 of chapter 3 OP notes
I need help
Hey,
First you calculate the goodwill in the direct subsidiary using the full goodwill method, which is $8000 and therefore its impairment will be 10% i.e. $800.
Then you calculate the goodwill in the indirect subsidiary.
I use a slight different way than that used in the solution
Cost of investment= 80,000*80%(Parent’s share in ‘Dimitrys’)= $64000
Share of net asset= ($70,000 + $48,000)*48% (effective share in Viltalis)= $56,640
Goodwill= $64,000-$56,640= $7,360
Therefore its 10% will be $736
So the total goodwill will be $800+$736= $1536
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