DFS Help - Impairment Of Goodwill

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Hi

I'm studying DFS through Kaplan distance learning and am attempting the mock exam included in the learning pack.

I am struggling with the consolidated balance sheet. The question has said that goodwill is to be impaired by 25% which I have used in my calculation for the goodwill. However on completing the balance sheet I am now out by the amount of the goodwill impairment figure (net assets are less than equity by this amount). Does the impairment amount also have to be taken account in the equity part of the balance sheet and if so where abouts? The text book doesn't really explain. I have done a couple of questions in the book but all it asks you to do is calculate goodwill with impairment but not to actually produce a balance sheet.

Many thanks
Emma

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:DFS Help - Impairment Of Goodwill

    When impairing assets (in accordance with IAS thirty eight [i've spelt it because I get a stupid smiley face when i type the number] you expense losses to the extent that they reverse out a previous gain.

    I don't think you will have any previous revaluation gains on goodwill in your question which need to be offset first against your impairment. Therefore, you should immediately expense the value of the impairment.

    Kind regards
    Steve
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:DFS Help - Impairment Of Goodwill

    Hi Steve

    Thank you for your reply.

    I think I understand it now.

    There are no previous revaluation gains so I assume that it will decrease the value of the retained earnings in the balance sheet (assuming the loss had been recognised in the income statement therefore reducing profit).

    Hope this is correct.

    Many thanks
    Emma

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