Overview
A collection of thoughts, ponderings, and advice on all things accounting related.
Also, the following link brings you to my “Pinterest” page where I archive any accountancy related web articles I’ve read recently:
Note: I previously had a link to a similar archiving website called Scoop-It but for all the gloss and glimmer of the website it proved a bit too clunky for me…
Kind regards,
Mike.
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Hi Mike,
I couldn’t remember your email address.
I will be at the KPMG business school session in CA house on thursday 1/12/2016. Can you do a question on IAS 24 Related Parties.
Cheers
John Kearns
Hi John, hope you found the session useful and that the IAS 24 tutorial questions resolve any issues for you.
Mike.
Hi Michael, I am an FAE student. I have few queries. Do you have an email address where I can contact you.
Hi Sonia, unfortunately I don’t answer detailed queries over email. However, I assume you have me for FAE lectures so just drop up to me before any of my lectures and I will go through your queries with you, no problem. Alternatively, you can always direct FAE queries through fae@charteredaccountants.ie
Hi Michael,
In group accounts where there is a disposal of subs shares without loss of control and fair value method is used could you please give the double entry?
CV of net assets: 480
Goodwill:200
Sold 10%
Proceeds: 100
Thanks!
Leona,
You have not provided enough information in your query so I will make the following assumptions:
Assume there is an 80/20 split between parent and NCI and that the CV of net assets of 480 excludes goodwill.
Assume the NCI is entitled to 96 of the net assets (excluding goodwill) just before disposal.
Assume the NCI is entitled to 50 of the goodwill just before disposal.
So… If the parent disposes of 10%, the CV of net assets disposed is [((480 – 96) x 10%) + ((200 – 50) x 10%)] = 53.4
Consol journals would be:
Dr Cash 100
Cr NCI 53.4
Cr Equity – Other Reserves 46.6
Hi Michael,
I have a question for goodwill impairment. I understand that when we perform impairment testing, the recoverable amount is compared to the carrying amounts of CGU which is Net Tangible Assets and goodwill. However, how should we deal with the negative NTA in a subsidiary? For example, should we calculate the total carrying amounts as net, e.g. $1,500 goodwill minus negative NTA $500= $1,000? What if the management assumes that the recoverable amount is zero, should we impair the full $1,500 goodwill or only impair $1,000? Thanks and look forward to your reply soon.
Hi Cecilia,
First, you seem to be mixed up in your terminology. The carrying amount of a CGU represents it’s net assets plus allocated goodwill. Note that net assets includes all assets and liabilities. Second, if there were negative net assets of $500 in a CGU and allocated goodwill was $1,500 then you would most definitely impair the goodwill by $1,500. If you think about it commercially, a CGU with negative net assets should have no goodwill remaining in it anyway.