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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Cash Flows – Impairment of goodwill
Please remind me (the last video on groups) why the adjustment re impairment of goodwill goes in operational cash flows as opposed to Investment cash flows
Impairment (like depreciation) is not a cash flow – it has been deducted in calculating PBT.
So, like depreciation, it must be added back in order to convert profits into cash flows.
Seeing as it is an investment in a subsidiary , why is it not added back to investment cash flows?
1. It is NOT a cash flow.
2. It is a CORRECTION – because the profit used in operating cash flows includes non-cash items. Exactly the same logic as depreciation.