Dear Tutors
Please help me....
I keep getting different results from different sources for resolving similar exercise and it’s driving me crazy:
For consolidated statement of financial position when we calculate consolidated reserves, if our subsidiary has impairment loss, let’s say £150,000 and our investment in subsidiary is 80%. Will this £120,000 be deducted from reserves when we calculate parents reserve or it will be deducted in full as 150k when we calculate subsidiary’s reserve????
Thank you ever so much
Ask the Tutor ACCA FR
Subsidiary-impairment loss
5y ago#1Hi,
It is a tricky one and depends on how the goodwill is measured, being either using the fair value method or the proportionate share of net assets method.
If we use the fair value method then the goodwill will consist of the parent's and the NCI's share of goodwill. Any impairment will therefore need to be split between the group retained earnings (W5) and the NCI (W4).
If we use the proportionate share of net assets method then the goodwill is that of the parent only. Any impairment will therefore go 100% to the group retained earnings (W5).
Hope that helps.
Thanks
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