Impairment review of proportonate goodwill
Impairment review of proportonate goodwill
Hi,
The idea of an impairment review of porportionate goodwill vs gross goodwill is that, when it's a proportionate goodwill, NCI is not impacted.
But I don't understand how it could be unless there are other mechanims stated somewhere else I missed, since impairment is recorded in the P&L, and the net result is mathematically splitted between parent and NCI, impairment of goodwill will definitly impact NCI ?
Is there something I missed out ?
Thanks
https://www.accaglobal.com/uk/en/studen ... st%20(NCI).
The idea of an impairment review of porportionate goodwill vs gross goodwill is that, when it's a proportionate goodwill, NCI is not impacted.
But I don't understand how it could be unless there are other mechanims stated somewhere else I missed, since impairment is recorded in the P&L, and the net result is mathematically splitted between parent and NCI, impairment of goodwill will definitly impact NCI ?
Is there something I missed out ?
Thanks
https://www.accaglobal.com/uk/en/studen ... st%20(NCI).
Re: Impairment review of proportonate goodwill
thanks Marek, my question was on the proportionate method, since the goodwill is not allocated to NCI, but if impairment is recorded in the P&L, it will undoubtedly impact NCI.
How is that possible to charge something in P&L and not impacting NCI ?
How is that possible to charge something in P&L and not impacting NCI ?
Re: Impairment review of proportonate goodwill
There's no automatic allocation to NCI in the group P&L though is there, only split to NCI if the loss is in a sub with minority interests or other matter applicable to NCIs. In this case there wouldn't be.
Re: Impairment review of proportonate goodwill
Still not clear for me. How you can charge something in the PL without impacting NCI?
Re: Impairment review of proportonate goodwill
Well, strictly speaking, you actually don't charge to P&L the impairment loss relating to NCI's interest in goodwill since it hasn't been recognised under IFRS 3.19(b). Make sure to familiarise yourself with Appendix C to IAS 36
Re: Impairment review of proportonate goodwill
Consolidated financial statements consist of separate FSs of parent and subsidiaries and consolidation adjusting entries. You can record and write down partial goodwill through consolidation adjusting entries. Separate PL of a subsidiary is usually auto-allocated to NCI by consolidation software, but you are not obligated to attribute consolidation adjusting entries to NCI.
Re: Impairment review of proportonate goodwill
Does it mean that the impact in the PL is not splitted between Group and NCI
Re: Impairment review of proportonate goodwill
Nope. Impairment losses on partial goodwill directly hit the profit attributable to owners of parent.
Re: Impairment review of proportonate goodwill
got it...
It's true that I've never paid attention to this. So, in case that a group hasn't realised any activities, and recorded only an impairment loss on the goodwill arising from acquisition of a company for 60% of the shares, the consolidated profit & loss statement will be the following :
Operating result -10
Profit attributable to parent -10
Profit attributable to mino: 0
But if the goodwill initially recorded was by using gross goodwill method, then, the consolidated P&L would be the following :
Operating result -10
Profit attributable to parent -6
Profit attributable to mino : -4
It's true that I relied on consoldiation software on this, and attribution of profit and loss are automatically done by the software. I had never recalled doing a manual adjustment to reallocate the -4 in from mino to parent when it's a partial goodwill.
It's true that I've never paid attention to this. So, in case that a group hasn't realised any activities, and recorded only an impairment loss on the goodwill arising from acquisition of a company for 60% of the shares, the consolidated profit & loss statement will be the following :
Operating result -10
Profit attributable to parent -10
Profit attributable to mino: 0
But if the goodwill initially recorded was by using gross goodwill method, then, the consolidated P&L would be the following :
Operating result -10
Profit attributable to parent -6
Profit attributable to mino : -4
It's true that I relied on consoldiation software on this, and attribution of profit and loss are automatically done by the software. I had never recalled doing a manual adjustment to reallocate the -4 in from mino to parent when it's a partial goodwill.
Re: Impairment review of proportonate goodwill
Not exactly right, total impairment charged to P&L would be higher under the second approach
Re: Impairment review of proportonate goodwill
yes yes, except that is it correct ?
Thanks Marek, here we go :
got it...
It's true that I've never paid attention to this. So, in case that a group hasn't realised any activities, and recorded only an impairment loss on the goodwill arising from acquisition of a company for 60% of the shares, the consolidated profit & loss statement will be the following :
Operating result -10
Profit attributable to parent -10
Profit attributable to mino: 0
But if the goodwill initially recorded was by using gross goodwill method, then, the consolidated P&L would be the following :
Operating result -16.67
Profit attributable to parent -10
Profit attributable to mino : -6.67
It's true that I relied on consoldiation software on this, and attribution of profit and loss are automatically done by the software which is splitting the -10 into -6 for the group and -4 for the mino. I had never recalled doing a manual adjustment to reallocate the -4 in from mino to parent when it's a partial goodwill. I guess in that case, I should do a manual adjustment.
Thanks Marek, here we go :
got it...
It's true that I've never paid attention to this. So, in case that a group hasn't realised any activities, and recorded only an impairment loss on the goodwill arising from acquisition of a company for 60% of the shares, the consolidated profit & loss statement will be the following :
Operating result -10
Profit attributable to parent -10
Profit attributable to mino: 0
But if the goodwill initially recorded was by using gross goodwill method, then, the consolidated P&L would be the following :
Operating result -16.67
Profit attributable to parent -10
Profit attributable to mino : -6.67
It's true that I relied on consoldiation software on this, and attribution of profit and loss are automatically done by the software which is splitting the -10 into -6 for the group and -4 for the mino. I had never recalled doing a manual adjustment to reallocate the -4 in from mino to parent when it's a partial goodwill. I guess in that case, I should do a manual adjustment.
Re: Impairment review of proportonate goodwill
yes, but remember about: viewtopic.php?p=6845#p6845
Re: Impairment review of proportonate goodwill
Thanks Marek