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When impairment value > goodwill,
Scenario 1: FV method (P acquire 80% of subsi)
Impairment value = $30m
Goodwill’s impairment = $24m
Net asset’s impairment = $6mShould the double entry be?
Dr RE $19.2m (24×0.8 + 6)
Dr NCI $4.8m (24×0.2)
Cr goodwill $24m
Cr Net asset $6mScenario 2: proportionate method (P acquire 80% of subsi)
Impairment value = $30.5m
Goodwill’s impairment = $19.6m
Notional goodwill impairment = $4.9m
Net asset’s impairment = $6mShould the double entry be?
Dr RE $25.6m (30.5 – 4.9)
Cr goodwill $19.6m
Cr Net asset $6mScenario 1
Goodwill down by 24
Other NCA down by 6
RE down by 80% of total loss – 24
NCI down by 20% of total loss – 6Scenario 2
Goodwill down by 19.6
Other NCA down by 6
RE down by 19.6
RE also down by 80% of 6
NCI down by 20% of 6In the exam remember the marks are mainly for explanation not calculation – I usually recommend that students say UP or DOWN rather than listing journals
I was wondered why the net asset’s impairment is attributable to the NCI as well? Thank you!
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