ifrs goodwill impairment
Post on 22-Jul-2015
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Goodwill ImpairmentNon Controlling Goodwill Not Recorded
Facts
•B purch 80% pf S for $5.5 million
•FV of S net assets were $5 million
•After one year 80% can be sold for $4.8 million after selling costs
•Value in use of 80% of S is $4.75 million
What’s The Goodwill Worth?
AT PURCHASE:
•Company is worth $6.875 million
•Net assets are worth $5 million
•Total goodwill = $1.875 million
Controlling vs Non Controlling Shares
$4,000,000
$1,000,000
FV Net Assets
$5,500,000
$1,375,000
FV of S
CREDIT
CREDIT
$1,500,000
$375,000
Goodwill
DEBIT
NON CONTROLLING GOODWILL IS NOT ON
THE BOOKS
1 YEAR LATER – IMPAIRMENT TEST
GOODWILL IS IMPAIRED
ALLOCATION
1,500,000
200,000 1.4 1.2
Sales
GOODWILL NET ASSETS
NO RECOVERIES OF GOODWILL
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