Question

What will be the impact on Goodwill, Non-controlling interest and the Group retained earnings if the non-controlling interest was measured as the proportionate of the identifiable net assets

Answer 1

As per IFRS 3, Financial reporting, the parent company measures any non controlling interest as per 2 methods:-

1. Fair value as determined by directors i.e. full goodwill method.

2.Non controlling interest's proportionate share of acquiree identifiable net assets.

IFRS 3 requires that any impairment loss should be written off to controlling and non controlling interest on the same basis as that in which profit and loss of subsidiary is allocated.

Thus the goodwill or impairment should be debited to group retained earnings resulting in reduction of retained earnings and reduction in non controlling interests on contrary. This should be done in the proportion of P&L of subsidiary.