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Dear Tutor,
In case of CGU, we 1st charge impairmetn against specific asset, then GW and then rrst of thr assets in propotionate manner.
However, while chsrging to “rest of the assets” we don’t chatge it against cash as cash is never impaired! But what about recieveables? Is impairment chargeable against receivables as well?
Hi,
The receivable will already be held at its recoverable amount as it will be subject to an impairment via the standards on financial instruments, so therefore the impairment is not allocated to the receivables.
If you look at the following link you will see where IAS 36 applies;
https://www.iasplus.com/en/standards/ias/ias36
Thanks
Hello tutor,
I have a problem on understanding the allocation of impairment where there is involvement of N.C.I,at first things were flowing quite smoothly but where there was an acquisition say of 80% of a sub and not 100%, the study manual talks of grossing up the goodwill and all..would you present this scenario more clear just as you did on a wholly owned subsidiary??(and if any proforma, please provide)
Hi,
If the subsidiary is not fully owned then any impairment will need to be allocated to the NCI too. In calculating the impairment we look at the net assets of the subsidiary, which includes goodwill. The issue is that if the goodwill has been calculated under the proportionate share method then this figure relates to P’s goodwill only.
In order to look at the full value of S’s net assets the goodwill in the group will then need to be grossed up to include the NCI’s share of goodwill too.
If the goodwill is calculated using the fair value method then there is no issue as the goodwill figure is the full goodwill figure.
Hope that helps a bit, it is tough.
Thanks
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