Impairment of goodwill and CGUs

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  1. Under IFRS 3 Business Combinations, requirements have been introduced whereby entities can choose alternative methods of calculating goodwill. Which methods of calculating non controlling interest(NCI) are allowed under IFRS 3?

  2. An entity acquired 70% of a subsidiary which is a CGU. At the year-end, the carrying amount of the subsidiary`s identifiable net assets is GBP 40 million; the recoverable amount of the CGU is GBP 61 million. Goodwill is GBP 28 million using the full goodwill method. Calculate any impairment loss arising.

  3. A acquired 75% of the equity of subsidiary (B). B became part of a larger CGU that includes another subsidiary (C) which is 100% owned by A. Goodwill of GBP 20 million arose on the acquisition of B and GBP 30 million on the acquisition of C. The carrying amount of the identifiable net assets of the combined CGU (B plus C) is GBP 80 million and the recoverable amount of the combined CGU is GBP 120 million. How will any impairment loss be dealt with in the group financial statements in relation to subsidiary B?

  4. An entity acquired 70% of a subsidiary which is a CGU. At the year-end, the carrying amount of the subsidiary`s identifiable net assets is GBP 40 million; the recoverable amount of the CGU is GBP 61 million. Goodwill is GBP 21 million using the partial goodwill method. Calculate any impairment loss arising

  5. The basic principle of impairment is that an asset may not be carried on the statement of financial position above its recoverable amount. What is the definition of `recoverable amount`?