I have some questions
First one is in 11 DEC 2012 impairment testing notes. I know how to calculate this notes. My question is in this case the entity use the full method, and the goodwill is 23 for Henny. I want to know if the impairment testing amount is 20 or below the amount of 23. How to split this impairment amount.
In my point, my way is if the impairment amount is 20 for example, the RE will be assigned 20*56% and NCI is 20*44%. Intangible asset should be 20. Am I right? (The notes said that the impairment amount related to the goodwill and intangible asset).
The second question is when we calculate the share of profit association, if the parent received the dividend from the association. How to deal with the dividend. Also use the 11 DEC 2012 paper as example, in the notes 4. Should I calculate the share of profit of association in such way: (30-2)*30%*6/12. If not why?Could u give me an simple example! Thanks so much!
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the impairment loss should be $50 ( $654-604), the recoverable amounts are lower than carrying value therefore impairment has occurred.
the rule to impairment is that any impairment loss is allocated to goodwill first then to other assets. therefore we have worked out that goodwill is $23, so we will need to CR goodwill $23, remaining $27 CR intangible assets. ($50-$23) using the rule above.
The impairment loss is $50 so we then DR RE ( 56% *50)= $28 and DR NCI ( 44% * 50)= $22.
the profit of the associate will be 30% as Minny owns 30% shares of Puttin. it has been acquired at 1/6/12- 30/11/12 y/e hence 6 months. the profit is $30 stated in the question but that profit will need to be split has minny only has a share of 30% so calculation will be $30*30%*6/12= 4.5, Putten has already paid dividend to minny of $2, so we have to minus the $2.
the $2 is dividend and has already been paid so we don't do 30-2.
hope this helps
Thanks for Answering my question.
I understand it. But I still have some further questions. For the questions 1 I asked above, if the impairment about is 20 not 50 and all the situations remain the same ,how to split between goodwill and RE AND NCI.
SECOND one is as u said the dividend is already paid so we do not calculate it as 30-2. If the dividend were not already paid, if I calculate it as (30-2)*30%*6/12, am I right? Thanks in advance.
if the impairment loss is $20 and goodwill is $23, you would do exact the same CR goodwill 20 and DR RE and DR NCI ( $20*0.56) and ($20*0.44)
CR goodwill $20
DR NCI $ 8.8
DR RE $11.2
yes that would be right
If the impairment is 20. Goodwill is 23. But the question said that the impairment relate to the intangible asset and goodwill. So u mean, if the impairment amount is 20. We just ignored the intangible asset. Right? I just want I know how much amount should be allocated to the intangible asset? Thanks
if the question states that it relates to intangible assets that means that the impairment loss will be all used for goodwill and the rest will be taken to intangible assets.
you gave an example of $20 which is below the goodwill value hence intangible assets would not be used. as we don not have any amounts to allocate to intangible assets because the goodwill is $23 and impairment loss is $20.
yes u will just ignore it. as remember the rule I stated above
Oh I got it. Thanks for u patience. Thanks a lot!
Well tutor
I remembered another question about the foreign currency CSOFP.
in the foreign transaction, it will have gain or loss resulting from goodwill and gain or loss on retranslation of foreign entity. Under a full method, the gain or loss resulting from retranslation of foreign entity should be split between GOODWILL AND NCI. Under a proportionate method, it should be also split between GOODWILL AND NCI, am I right?
But for the gain or loss resulting from goodwill, in my view, I think the gain or loss would be split only under the full method. But under the proportionate method, all of gain or loss amount should be taken on the RE,right? Thanks
is this a pass paper question you seen?
I think your right the proportionate method the gain/ loss should be all taken to RE. its best to look for a past exam paper and look at the solutions to see how it is split
No. In pass papers about foreign currency questions, I know how to calculate it. The questions I asked above is I considered according to the pass paper questions. I want to know if under the proportionate method, how to calculate and split between GOODWILL AND NCI resulting from gain or loss about goodwill and retranslation of the foreign currency entity?
it goes to RE and do not need to split.
The gain or loss resulting from foreign translation should be split to GOODWILL AND NCI no matter what the method is full or proportionate? Right
Thanks
No just for proportionate methods. for goodwill method it gets split to NCI and RE. look at jun 11 pass paper. foreign exchange.
Ok. I got it thanks for u help.
Sorry. For a gain or loss resulting from goodwill under the full or proportionate method. How to split them in each method?
you would split it to NCI and RE.
thanks a lot
thanks Kerri,
Just did this question and wondering where they got that .5 from.
dates Duh!
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