Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Impairment of cash generating unit
- This topic has 6 replies, 5 voices, and was last updated 1 year ago by
Stephen Widberg.
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- December 5, 2018 at 6:04 am #487371
Hi, for impairment of cash generating unit, if we were given recoverable amount of a specific NCA, do we allocate the impairment to this specific NCA first before impairing the goodwill?
For e.g. Current carrying value of CGU:
Goodwill 30
PPE 100
Machine 80
Total 210Impairment test shows that the recoverable amount of the entire CGU is 180 and the PPE is 80.
So do we impairment the PPE by 20 first (from 100 to 80), followed by impairment of goodwill by 10, therefore 20 goodwill left
OR
First impair the goodwill by the entire 30 to 0 and keep the PPE as 100?
Thank you.
December 5, 2018 at 8:29 pm #487732Hi,
Yes, we impair any assets where there is specific information that shows it is impaired. So here is specifically states the recoverable amount as 80, so it would be impaired by the 20 down to the 80.
Thanks
September 20, 2022 at 9:34 am #666768Anonymous
Inactive- Topics: 1
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hi
sir but why do we charge the remaining of the impairment to the goodwill? whats the logic there? i was hoping that you could shed some light on the reason for this treatment
thank you very muchSeptember 20, 2022 at 10:46 am #666773I think the impairment should be allocated by this priority: Firstly PPE 20; Secondly Good will 10. If the information didn’t mention PPE’s recoverable amount, and impairment allocation priority will be: Good will 30. Many thanks if there has second opinion!
September 20, 2022 at 12:30 pm #666803I’ve seen answers both ways. 🙂
But I would probably do goodwill first if you have allocated the PPE to a CGU which includes goodwill.
As always it’s your words that count (more than numbers) – so don’t lose sleep on this one.
September 20, 2022 at 3:39 pm #666847Anonymous
Inactive- Topics: 1
- Replies: 7
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hi
sir but why do we charge the remaining of the impairment to the goodwill? whats the logic there? i was hoping that you could shed some light on the reason for this treatment
thank you very muchSeptember 24, 2022 at 12:56 pm #667148Interesting Question. I suppose it’s because the goodwill is the most ‘un-assetlike’ asset of all of the assets. 🙂
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