If a subsidiary has a retained losses and it increase from year to year
In the parent separate financial statement as Subsidiary was recognized at cost Is there is a need to impairment or write down the cost of the investment of this subsidiary??
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IAS 36, in case of a group of companies, is generally targeted at identifying and recognizing impairment at a group level. So if goodwill at a consolidated level has been impaired then in case of parent standalone financials the investment in subsidiary would also have to be reviewed for impairment. The recoverable value of an investment in a subsidiary would normally be based on the subsidiary’s present value of cash flows.
Some aspects which one may consider are –
1. If this subsidiary is a part of a profitable larger CGU and at CGU level if there is no impairment then there may be no impairment at individual subsidiary level.
2. Transfer pricing between subsidiaries need to be reviewed to arrive at fair value of subsidiary.
Hope this is helpful.
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