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Pr Chenor Limited has goodwill amounting to RM38 million in its financial statement from an acquisition of Changi Corporation
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Answer #1
In the given question, RM in million
Fair value of Changi corporation as per appraisal 132
Fair value of Changi corporation's net assets (excluding goodwill) 120
Goodwill is the difference in fair value as per appraisal and net assets or excess of amount than the fair value of net assets
Fair value of goodwill = 132-120 12
Carrying value of goodwill in Chenor Ltd 38
Impairment occurs if carrying value is less than recoverable value or value in use whichever is higher
Recoverable value = Fair value - costs to sell = 12
Value in use of the company is given as (Present value) 135
Fair value of the company as per appraisal 132
Goodwill = excess of value in use over fair value = 135-132 3
Higher of fair value and value in use = 12
Carrying value of goodwill in Chenor Ltd 38
Impairment = 38-12 = 26
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