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Journal cover: Accounting Research Journal

Accounting Research Journal

ISSN: 1030-9616

Online from: 2005

Subject Area: Accounting and Finance

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Calculating non-controlling interest in the presence of goodwill impairment

Document Information:
Title:Calculating non-controlling interest in the presence of goodwill impairment
Author(s):Grant Samkin, (Department of Accounting, University of Waikato, Hamilton, New Zealand), Craig Deegan, (School of Accounting and Law, RMIT University, Melbourne, Australia)
Citation:Grant Samkin, Craig Deegan, (2010) "Calculating non-controlling interest in the presence of goodwill impairment", Accounting Research Journal, Vol. 23 Iss: 2, pp.213 - 233
Keywords:Financial management, Interest, Share values
Article type:Technical paper
DOI:10.1108/10309611011073278 (Permanent URL)
Publisher:Emerald Group Publishing Limited

Purpose – The primary aim of this paper is to illustrate how goodwill impairment loss should be accounted for when measuring non-controlling interest in subsidiaries.

Design/methodology/approach – The paper uses two scenarios to illustrate how non-controlling interest in subsidiaries should be measured in the presence of goodwill impairment loss.

Findings – The way the management of a reporting entity values the non-controlling interest in a subsidiary will result in different amounts being disclosed in financial statements for non-controlling interest in earnings, non-controlling interest, retained earnings and total equity.

Research limitations/implications – The paper uses two scenarios to illustrate a simple consolidation with a parent entity, a subsidiary and a sub-subsidiary.

Practical implications – Practical guidance on how goodwill impairment losses under International Accounting Standard 36 Impairment of Assets when measuring non-controlling interest under International Financial Reporting Standard 3 Business Combination, is provided.

Originality/value – The paper corrects any misunderstanding that may exist on the impact goodwill impairment losses have on closing equity when non-controlling interest is calculated under the different methods of valuing non-controlling interest.

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