Goodwill - F2 Flashcards
How is goodwill valued on acquisition if we use the fair value method?
Investment - Fair Value
NCI at acquisition - Fair Value
How is goodwill valued on acquisition if we use the proportionate share of net assets?
Investment - Fair Value
NCI at acquisition - Proportion of sub’s net assets at acquisition
When should goodwill be tested for impairment?
At each reporting date
If an impairment loss exists where would it be recorded?
Goodwill is written down and loss is charged as an expenses to the P&L
If we valued goodwill using the fair value method who is the impaurment attributable to?
Both parent and NCI shareholders
To record:
Cr - Reduce GW by full amount of impairment loss
DR - Reduce NCI balance held in equity by the NCI% of impairment loss
DR - Reduce consolidated retained earnings by P% of impairment loss
If we valued goodwill using the fair value method who is the impairment attributable to?
Parent Shareholders
To record:
Cr - Reduced goodwill by impairment loss
Dr - Retained earnings by the amount of the impairment loss
When is goodwill determined?
goodwill is determined after recognising and measuring the identifiable assets acquired and liabilities assumed in the acquisition
What does IFRS 13 Fair value measurement permit?
Fair values to be determined based on their “highest and best use”.
If carrying amount is less than fair value of assets at acquisition what should we do with the difference?
Add difference onto carrying amount when we do goodwill calculation. This will reduce goodwill.
If there is a contingent liability on acquisition how should we account for it?
Fair value deducted from net assets when calculating GW.
Fair value recognised in consolidated financial statements
If we end up paying more in future then it will be recorded as a post-acquisition adjustment
