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Hi,
I am getting confused with the impairment on goodwill.
When the impairment is split between the goodwill and PPE (because the total amount of goodwill is not sufficient to deduct the impairment), and we use FV of NCI – do we deduct the NCI% of the impairment relating to goodwill only or do we deduct the NCI% of the total goodwill ?
Eg:
Total impairment is $ 247
Goodwill as at Y/E is $ 100, thus we only deduct Impairment of $ 100 from Goodwill and the difference of $ 147 will be deducted from PPE.
Total of NCI (using FV method) is $ 414 (before deducting the impairment).
My question is here – which amount of impairment do we have to deduct ? Is it the $100 or $247 ?Many Thanks 🙂
Hi,
The deduction to NCI is only made if we are valuing the goodwill under the full goodwill method. In this instance the goodwill is reduced and then the group share goes through group reserves and the NCI share goes against the NCI.
In your example above, the NCI share of the $247 will go through NCI and the group share through retained earnings, assuming the goodwill is under the full goodwill method.
If not then the full impairment goes through group retained earnings.
Thanks
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