Chapter 13

Question 1

Subsidiary

Answer 1

EXP: parent company owns 80% of share in subsi company, but parent can 100% get the subsi’s assets and liabilities, thus it needs to consolidate 100% of assets and liability.

However, parents just owns 80% of shares but can how it suppose to match the 100% of assets and liability?

Hence, got NCI 20%: 80% FV of consideration transferred + 20% NCI - 100% of identifiable net assets = GOODWILL

Question 2

Fair value of goodwill (full goodwill)

Answer 2

NCI:
* * use % NCI * no.shares of subsi * subsi share price

Goodwill:
* Need to split to parent and NCI

If disposal of subsi - control-to-control disposal:
* NCI % increase - (GW+Net Asset of subsi) x 10% increase. i.e, 30% to 40%
* NCI % decrease - (NCI total $ x 10/40) i.e., drop from 40% to 30%

Question 3

Proportional goodwill (partial goodwill)

Answer 3

NCI:
* use identifiable NA * % NCI

Goodwill:
* Goodwill - based on % of parent
* notional goodwill - based on % of NCI (use goodwill / % parent * % NCI, i.e., xxx/80%*20%)
* no need split to NCI, just whole figure split to parent only

Question 4

Impairment (RE & NCI)

Answer 4

• If full goodwill impairment need to split to parent and NCI
• If partial goodwill just split to parent only
• impairent of other assets and impairment of specifically impaired asset need to split parent and NCI accordingly