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Hi Sir Chris!
Just want to seek clarification on impairment losses.
1. In a full goodwill method, impairment losses are shown in part of the NCI and parent’s RE.
2. In a partial goodwill, impairment losses are not shown in NCI portion but only shown in parent’s RE.
3. In a partial goodwill, where impairment loss is said to be related to goodwill and PPE, adjust to working 2 (identifiable net assets) and not shown in NCI portion nor parent’s RE.
Are the above statements true?
Thanks!
Hi Kyler,
Your first two are perfectly correct. I’m not 100% sure what you’re referring to on the third however. If there is an impairment then we still have to post a profit adjusting entry, so will adjust the group retained earnings. The hit to the SFP will go to goodwill first and then if necessary to any other specific assets and then pro-rata.
Thanks
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