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When we are preparing consolidated income statement we add 80% of impairment of goodwill for partial and 100% for full goodwill in operating expenses. Right?
Now in this question HOSTELING it says that its policy is to value the non-controlling interest using proportionate share. I am just writing a relevant portion of that question for you. The goodwill of subsidiary should be written down by $2m. admin expenses of Parent are $7.5m and subsidiary are $7m. Now my question is that for consolidated I/S aren’t we suppose to calculate admin expenses like ths = 7.5m + 7m + ( 80% of 2m). ?
Whereas in the standard answer they have taken full impairment,
I hope you have understood what i am trying to ask,
One thing springs immediately to mind – if the nci is on a proportionate basis, they should not be charged with any of the goodwill impairment since all the goodwill is “ours”
Secondly, even if they are valued on a full basis and therefore DO have goodwill attributed to the, the I/S charge is the full 100% of the annual impairment
in the question hosterling when we are calculating shara of loss of assocaites to charge in income statement from where impairment of 500 is taken ..and while calculating NCI in the same question they have not taken impairment expense of 2000 why???
The question is asking to calculate the goodwill arising on the acquisition of Sunlee, so since the impairment test was conducted at the end of the year, no impairment on the acquisition date.
In continuation the 5th point of the question says, due to the losses, investment in Ambra was worth $21.5 M, whereas before impairment it was $22, so there is an impairment of $.5.
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