PART A:

Question No 1:

Reference is made to Note 2 & 8 of the financial statements of Dell Technologies Inc. The

accounting policy used by the company for recording Goodwill and other intangible assets is

governed by FASB amended laws issued in January 2017 with a new focus on goodwill

impairment testing. (Page # 109 & 136)

The reported balances are as follows:

31 JAN 2019 31 JAN 2020

Amounts in Millions $

GOODWILL 40,089 41,691

Other Intangible Assets 22,270 18,107

Question No 2:

VMware Inc. acquired during the year and recorded a goodwill charge of 1,911M USD during

the said period. Goodwill from other business was recorded at 16M USD and thus total goodwill
during the period increased by 1,927M USD prior to making adjustments of foreign currency

translation and impairment charge for the period. (Page # 136)

Question No 3:

Fiscal year ended January 31, 2020

1- Total amount of Non-controlling assets reported as 913M USD (Page # 63)

2- ITEM 7 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS(page # 47). Section Non-Controlling

Assets. (page # 63)

3- 4.6 B USD

4- VMware Inc 80.9%

Pivotal 0.0%

Secure Works 86.8%

5- Impairment testing required in third quarter of fiscal year which the company made early

in third quarter ending November 2 ,2018. (Page 109 & Note 8)

PART B:

1-a)

In 2014 the private companies and their stakeholders expressed concern in the cost and

complexity of goodwill impairment test. FASB extended this concern to public companies and

not-for-profit organization issued the amendment.

[ CITATION FAS15 \l 1033 ]

1-b)

Example

Name of the SIFCO INDUSTRIES, INC.

company ( 1

mark)
The year (1

mark)
- The amount
Th goodwill impairment adjustment made for 8,294 USD and closing
and details
balance for the year 30th September 2019 3493 USD.
of goodwill

impairment

charges as
https://www.annualreports.com/HostedData/AnnualReports/PDF/AMEX_SI
mentioned in
F_2019.pdf
the annual

report

- The URL Respective Page # 36 of the annual accounts.

(Internet add

ress) of the

annual report

- The page

number(s) in

the annual

report. (6

Marks)
 The specific
As of July 31, 2018, the annual goodwill impairment test date for fiscal
underlying
2018, goodwill existed at two of the Company's reporting units, Cleveland,
business
Ohio and Maniago, Italy. In fiscal 2018, no impairment charges were
reasons that
identified in connection with the annual goodwill impairment test with
required the
respect to any of the identified reporting units. The fair values of the
company to
reporting units were in excess of our carrying values. [ CITATION
record the
SIF19 \l 1033 ]
goodwill

impairment

charges as

mentioned in

the annual

report and

any other

information

from the

media (7.5

Marks)

Question No 2:

[CITATION Ric \p 2020 \y \l 1033 ]

The reporting unit is instructed to test the goodwill impairment testing at least annually.
 IFRS GAAP

IAS36 ASC350
Assignment/allocation of goodwill Goodwill Goodwill is

according to CGU according to

a small cash reporting unit

generating but whether it’s an

independent. CGU operating segment or

must not be less than that.

greater than an

operating segment
PART
Impairment of goodwill Comparison of Loss if carrying
C:
carrying amount amount of reporting

of CGU with the unit is greater than its All

recoverable fair value. If the three

amount value is zero or

negative impairment

is recorded.
How impairment loss is recognized The loss The loss is difference

and allocated difference is first of reporting unit

charged to carrying amount

goodwill until exceeds fair value.

zeroed. After that Loss should not

the carrying result in negative

amounts of other goodwill.

assets are reduced

on pro-rata basis.
Loss reversal not
Loss reversal not
allowed.
allowed.
below aspects is to attain growth, increase market share, diversify and provide strong

structure.

[ CITATION Zah \l 1033 ]

Explanation Name of the Detailed information about

companies this business combination

Merger Two companies Coca Cola and Merger creates large

come together to Pepsi beverage corporate with large

form a combined division. market share.

company.

Consolidation Amalgamation of 2015. Target CVS rebranded it to

small corporates Corp sold its MinuteClinic.

into one large pharmacy

corporate. division to CVS

Health.

Acquisition Business strategy. 2006. Corus Taxation synergy.

One corporate takes group by TATA Financial benefit. Increase

control of the other Steel in competitive advantage.

 one either buying

assets of the target

company or

purchasing the

controlling stake

2) This will have tax implications.

To explain this situation we can take a hypothetical example of a company facing this situation.

Suppose P is a parent company and sell inventory of USD300 to a subsidiary company overseas

at the end of the accounting period. The cost to P was 200 USD. The tax rate is 40% in P country

and in S country it is 50%. Suppose the inventory is still in the subsidiary company at reporting

time. P company will make an adjustment at the end of the period for group sales for making the

consolidated accounts. Later in next year if the same inventory is sold for 300 USD by company

S then the following entries will be reflected in the consolidated statements.

Dr Current Tax Exp (100*0.4) 40

Dr Deferred Tax Asset(100*0.5) 50

Cr Current Tax Payable 40

Cr Deffered Tax 50

In subsequent year when the sales are actually made to a third party outside the group the

following will be recorded in companies consolidated statement:

Dr Cash 300

Dr Cost of goods sold 200

Dr Income Tax exp 50

Cr Sales 300

Cr Inventories 200

Cr Def Tax asset 50

3)

Upstream sale is when subsidiary sells to its parent company. Its reverse is downstream sales

when a parent company sells to subsidiary.

When at the end of an accounting period all such sales needs to be accounted for as those sales or

not outside the group and cannot form or recorded as sales for the parent company or the group.
This is during consolidation process. In the case of unrealized profit or loss on downstream sales,

all the profit or loss is assigned to the parent company-seller. But unrealized profit or loss on

upstream sales is profit or loss of the subsidiary-seller and is assigned to the parent company and

non-controlling interest in relation to their proportionate holdings.

PART D:

ALL AMOUNTS IN USD.

Part 1:

Cash Investment 6,400,000

Share in Adjusted Net Income 208,000
Dividends 2018 (48,000)
Closing Balance 2018 6,560,000
Opening Balance 2019 6,560,000
Share in Adjusted Net Income 272,000
Dividends 2019 (48,000)
Closing Balance 2019 6,784,000

Working

Scann Corp 2018 2019

Income for the year 300,000 360,000
Amortization equipment (20,000) (20,000)
Amortization Inventory (20,000) -
Adjusted Net Income 260,000 340,000

Amortization of under 2018 2019 Balance

valued assets
Equip(80,000)/4 20,000 20,000 40,000
Ìnventory 20,000 - -
Total 40,000 20,000 40,000

Part 2:

Investment in Scann will not be shown in consolidated accounts as it belongs to parent company

Panaroma

Part 3:

Net Income Panorama 1,100,000

Net Income Scann 300,000
Adjustment in Scann Income (40,000)
Consolidated Net Income 2018 1,360,000
2019
Net Income Panorama 1,150,000
Net Income Scann 360,000
Adjustment in Scann Income (20,000)
Consolidated Net Income 2019 1,490,000
Part 4:

Share of Non Controlling Interest `1,600,000

(6,400,000/80,000)20
20% share in Adjusted income 260,000 x 20% 52,000
Less Dividend 60,000 x 20% (12,000)
Closing Balance of Non Controlling Interest 1,640,000

2018
2019
Opening Bal 1,640,000
20% share in Adjusted income 340,000 x 20% 68,000
Less Dividend 60,000 x 20% (12,000)
Closing Balance of Non Controlling Interest 1,696,000

2019

Part 5:

As calculated in part 4.

Work Cited:

FASB. (2015). fasb.org. Retrieved from FASB:

https://www.fasb.org/jsp/FASB/Document_C/DocumentPage?
cid=1176168778106&acceptedDisclaimer=true

SIFCO. (2019). Annualreports.com. Retrieved from

https://www.annualreports.com/HostedData/AnnualReports/PDF/AMEX_SIF_2019.pdf
Stuart, R. (n.d.). rsmus.com. Retrieved from www.rsmus.com

Zahiraccounting.com. (n.d.). Retrieved from zahiraccounting.com: https://zahiraccounting.com/en-

my/31540-merger-consolidation-and-acquisition-as-the-business-
strategy.html#:~:text=Enterprise-,Merger%2C%20Consolidation%2C%20and%20Acquisition
%20As%20The%20Business%20Strategy,and%20increase%20the%20market%20share.