Re: Alpha Division (APM12/07)

Dear Sir,

Alpha Division:
– Amortization of goodwill amounted to $5, per year in both 20X6 and 20X7. The amount of goodwill written off against reserves on acquisition in years prior to 20X6 amounted to $45m.

I do not understand why the adjustment for capital employed for goodwill in 20X7 is $50m and not $5m? It is because the capital employed for 20X6 will have already been adjusted for in which it will be the opening capital employed for 20X7?

Thanks for your help!

Regards,
Joanna.