In the FS of the Parent Company, investment in subsidiary is impaired completely. However, the Parent still control the subsidiary.
At consolidation level, Is it permissible to exclude the subsidiary?
Impairment of subsidiary
Re: Impairment of subsidiary
To exclude from consolidation? No, why would you, this subsidiary is still part of the group.
Re: Impairment of subsidiary
In the book of the Parent Company, Investment in subsidiary is Nil.
At consolidation level, investment in subsidiary needs to be offset against share capital of the subsidiary.
Should I reverse the impairment?
At consolidation level, investment in subsidiary needs to be offset against share capital of the subsidiary.
Should I reverse the impairment?
Re: Impairment of subsidiary
Impairment of shares is reversed in consolidated financial statements. However , assets of this subsidiary may be impaired and an impairment loss on them may be needed in consolidated financial statements
Re: Impairment of subsidiary
Was it a business combination at group level? There may be goodwill, intangibles recognised at group level etc also impaired.
Re: Impairment of subsidiary
Yes, it's a business combination at group level.
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Re: Impairment of subsidiary
The impairment of the subsidiary is also reversed at the consolidation level in addition to the usual elimination of subsidiary share capital against the cost of investment. The impairment is a company level accounting entry.
If you have goodwill relating to this business combination, this may be subjected to be impaired.
If you have goodwill relating to this business combination, this may be subjected to be impaired.
Re: Impairment of subsidiary
Exactly as @jonyicheng said, when you are performing consolidation you reverse the impairment against i.e. credit Retailed earnings / impairment charge and debit the investment in subsidiary and then the investment in subsidiary is eliminated against share capital / pre-acquisition reserves of the subsidiary.