The impairment loss does not exceed the total of the recognised and unrecognised goodwill so therefore it is only goodwill that has been impaired. The other assets are not impaired. As proportionate goodwill is only attributable to the parent， the impairment loss will not impact NCI.

Only the parent's share of the goodwill impairment loss will actually be recorded， ie 60% x $50 = $30.

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 $270 （$300 - $30）。

In the group statement of financial position， the accumulated profits will be reduced $30. There is no impact on the NCI.

In the group statement of profit or loss， the impairment loss of $30 will be charged as an extra operating expense. There is no impact on the NCI.

GROSS GOODWILL AND THE IMPAIRMENT REVIEW

Where goodwill has been calculated gross， then all the ingredients in the impairment review process are already consistently recorded in full. Any impairment loss （whether it relates to the gross goodwill or the other assets） will be allocated between the parent and the NCI in the normal proportion that they share profits and losses.

CONSIDER AN IMPAIRMENT REVIEW OF GROSS GOODWILL

At the year-end， an impairment review is being conducted on an 80%-owned subsidiary. At the date of the impairment review the carrying value of the net assets were $400 and the gross goodwill $300 （of which $40 is attributable to the NCI） and the recoverable amount of the subsidiary $500.

Required

Determine the outcome of the impairment review.

Solution

The impairment review of goodwill is really the impairment review of the net asset's subsidiary and its goodwill， as together they form a cash generating unit for which it is possible to ascertain a recoverable amount.

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