Following IFRS, the goodwill is allocated to CGUs 1, 2 and 3. The following information is...
Following IFRS, the goodwill is allocated to CGUs 1, 2 and 3. The following information is available for goodwill impairment testing:
| CGU1 | CGU2 | CGU3 | |
| Book value of goodwill | 2,500,000 | 4,000,000 | 1,500,000 |
| Fair value of CGU | 14,000,000 | 7,000,000 | 13,000,000 |
| Book value of CGU | 15,000,000 | 10,000,000 | 10,500,000 |
Q1 Goodwill impairment loss for 2019, following IFRS
a. 1500,000
b. 2000,000
c. 3500,000
d.4000,000
Q2 Impairment loss for 2019 for the customer lists and brand names, following IFRS
a. 0
b. 300,000
c. 1800,000
d. 2100,000
Homework Answers
| Q -1 | CGU1 | CGU2 | CGU3 | ||||
| Book value of goodwill | 2,500,000 | 4,000,000 | 1,500,000 | ||||
| Fair value of CGU | 14,000,000 | 7,000,000 | 13,000,000 | ||||
| Book value of CGU | 15,000,000 | 10,000,000 | 10,500,000 | ||||
| Reduction
in value (Fair value- Book value) |
-1,000,000 | -3,000,000 | No reduction | ||||
| In a cash-generating unit, goodwill is reduced first; then other assets are reduced pro rata. | |||||||
| Goodwill impairment | 1,000,000 | 3,000,000 | 4,000,000 | ||||
| Hence, (d) 4,000,000 is correct. | |||||||
| Q-2 | a. 0 (all impairment has been allocated to goodwill only) | ||||||
*If you have any doubt feel free to ask in the comment section. Please give your valuable feedback.
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Following IFRS, the goodwill is allocated to CGUs 1, 2 and 3.
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