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Allocation of impairment loss

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Allocation of impairment loss

  • This topic has 1 reply, 2 voices, and was last updated 10 months ago by P2-D2.
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  • August 8, 2021 at 4:31 am #630709
    7fsa
    • Topics: 56
    • Replies: 40
    • ☆☆

    Dear Chris,

    How are you?
    I hope you are doing well,
    i would like to thank you for your effort, your appreciated time and your nice humor I do love your way of explanation I actually do enjoy watching your videos.
    In case of allocating the impairment loss in your lecture you have already deducted the full amount of the goodwill value down to zero could you tell me why?
    I mean its a rule to deduct the full goodwill value down to zero in case of having an impairment balance and what is the point of falling the value of the goodwill down to zero?

    Thank you in advance.

    August 8, 2021 at 10:27 am #630753
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6115
    • ☆☆☆☆☆

    Hi,

    So pleased to hear that you are still enjoying all of the lectures. Please spread the word to your friends so that we get more people accessing the materials.

    We take the impairment to goodwill as this is just a number that doesn’t really represent anything within the financial statements. It is just a recording for the excess paid to acquire the business initially and it we have an impairment then we must have overpaid in the past so the sensible thing to do is to get rid of this balance first before looking at the remaining assets.

    Thanks.

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