ACCA P2 考試：IMPAIRMENT OF GOODWILL （Part 6）

The impairment loss will be applied to write down the goodwill, so that the intangible asset of goodwill that will appear on the group statement of financial position, will be $100 （$300 - $200）.

In the equity of the group statement of financial position, the accumulated profits will be reduced by the parent's share of the impairment loss on the gross goodwill, ie $160 （80% x $200） and the NCI reduced by the NCI's share, ie $40 （20% x $200）.

In the statement of profit or loss, the impairment loss of $200 will be charged as an extra operating expense. As the impairment loss relates to the gross goodwill of the subsidiary, so it will reduce the NCI in the subsidiary's profit for the year by $40 （20% x $200）.

OBSERVATION

In passing, you may wish to note an apparent anomaly with regards to the accounting treatment of gross goodwill and the impairment losses attributable to the NCI. The goodwill attributable to the NCI in this example is stated as $40. This means that goodwill is $40 greater than it would have been if it had been measured on a proportionate basis； likewise, the NCI is also $40 greater for having been measured at fair value at acquisition.

The split of the gross goodwill between what is attributable to the parent and what is attributable to the NCI is determined by the relative values of the NCI at acquisition to the parent's cost of investment. However, when it comes to the allocation of impairment losses attributable to the write off of goodwill then these losses are shared in the normal proportions that the parent and the NCI share profits and losses, ie in this case 80%/20%.

This explains the strange phenomena that while the NCI are attributed with only $40 out of the $300 of the gross goodwill, when the gross goodwill was impaired by $200 （ie two thirds of its value）, the NCI are charged $40 of that loss, representing all of the goodwill attributable to the NCI.

Tom Clendon and Sally Baker are tutors at Kaplan Financial

Last updated： 4 Dec 2015