Goodwill impairment testing

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daljeet
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Joined: 26 Jan 2021, 04:55

Goodwill impairment testing

Post by daljeet »

Hi,

If there is goodwill on acquisition of 60% subsidiary, how do i test the goodwill for impairment based on VIU?

Should = ( carrying amount of goodwill + net assets of subsidiary) - recoverable amount ?
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Marek Muc
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Re: Goodwill impairment testing

Post by Marek Muc »

it can be a bit tricky, the exercise depends on how you measured the NCI:
https://ifrscommunity.com/knowledge-bas ... g-interest

fortunately IAS 36 deliberates a bit on this matter (see appendix C of IAS 36 and example 7)

eg.C4 of IAS 36
If an entity measures non-controlling interests as its proportionate interest in the net identifiable assets of a subsidiary at the acquisition date, rather than at fair value, goodwill attributable to non-controlling interests is included in the recoverable amount of the related cash-generating unit but is not recognised in the parent’s consolidated financial statements. As a consequence, an entity shall gross up the carrying amount of goodwill allocated to the unit to include the goodwill attributable to the non-controlling interest. This adjusted carrying amount is then compared with the recoverable amount of the unit to determine whether the cash-generating unit is impaired
Allocating an impairment loss follows
daljeet
Posts: 22
Joined: 26 Jan 2021, 04:55

Re: Goodwill impairment testing

Post by daljeet »

Thanks a lot.
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