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1. Could you please help me understand in what step is impairment allocated to a cash generating unit? In one place I read first to goodwill and then to remaining assets in pro-rata basis. In another place I read first to the asset affect, then Goodwill. then to the remaining assets.
2. IAS 38 states that internally generated assets cannot be capitalised, however in a past paper answer, the examiner wrote in the report it can be capitalised if it meets the criteria of IAS 38. What is the right treatment if this appears in the exam?
1. See page 51 of the SBR notes
2. See page 49 of the SBR notes internally-generated “assets” that cannot be distinguished from goodwill cannot be capitalised. But if identifiable and controllable, costs incurred in a “development” phase (as opposed to a research phase) must be capitalised when the stated criteria are met.
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