I think the entry you proposed is correct as goodwill from acquisition would only be shown in consolidated a/c.
If it is a loss making sub the main advise to your client is that he has to right away have a plan for impairment testing of the investment, I think that is the main issue
The treatment by client is very improper.
The asset should be shown at initial cost and thereafter goodwill may be shown in consolidated financial statements.
Your cllient is permitted to show the investment in its separate financial statements valued at cost or in accordance with IAS 39. Unless of course it has been classified as held for sale in which case IFRS 5 would apply.
In the consolidated financial statements, IFRS 3 would be applicable in determining the goodwill.
Please note that the revised IAS 27 and IFRS 3 can be early adopted and the treatment for goodwill recognition would be impacted if your client early adopts IFRS 3 in which case IAS 27 revised would also have to be early adopted.