Practice question - 3 Gill and Job pg: 252

Working W3 Consolidated retained earnings H's own + H's share of S post-acq retained - Goodwill impaired since acquisition (just our share) 90,000 + 90% x 40,000 - 90% x 3,000 So: 90,000 + 36,000 - 2,700 = 123,300 OK?

Hi Mike thanks for your prompt response, Unfortunately I am still confused. I recall you saying treat Revaluation surplus like Retaining Earnings, therefore I added it W3, H - 90 + 50 = 140 S - 15 + 40 = 55 And then I continued, should I avoid starting of this way? But also, I still cannot see where £2700 comes from? Please explain how to deal with - "Goodwill had been impaired by 80% as at 31 December, 2009 and is now to be fully impaired." I am struggling with this. Many thanks

"Please explain how to deal with – “Goodwill had been impaired by 80% as at 31 December, 2009 and is now to be fully impaired.”" Goodwill was calculated at 3,000 It had been impaired by 80% = 2,400 Now we need to impair by the remaining 600 So, for working W3, goodwill has been impaired by the full 3,000 Back to the "song": H’s own + H’s share of S post-acq retained – Goodwill impaired since acquisition (just our share) Goodwill impaired since acquisition is now 3,000 Our share of 3,000 is 90% 90% of 3,000 is 2,700 What is there not to understand? As for the revaluation reserve, it is treated the same as retained earnings. That is, the same old song applies! H’s own + H’s share of S post-acq retained – Goodwill impaired since acquisition (just our share) Technically I suppose that a fair value adjustment upwards could go into a revaluation reserve. I tend to simply include them within retained earnings. But if you're given a revaluation reserve in the question, then keep it separate. But the TREATMENT is the same as for retained earnings