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Impairment

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Impairment

  • This topic has 1 reply, 2 voices, and was last updated 3 years ago by Stephen Widberg.
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  • April 21, 2022 at 5:12 pm #654232
    sopingyuen
    Member
    • Topics: 4
    • Replies: 3
    • ☆

    As per IAS 36, where an asset cannot be assessed for its recoverable amount individually it can be assessed as part of a cash generating unit. The impairment is written off against the assets by allocating first against goodwill then against other assets on a prorated basis.

    However, goodwill only appears on group financial statements rather than on individual subsidiaries’ books. Does it mean that impairment is only required for group accounts? Or, impairment is first done on subsidiary level then again on group level?

    April 22, 2022 at 8:30 am #654255
    Stephen Widberg
    Keymaster
    • Topics: 16
    • Replies: 3411
    • ☆☆☆☆☆

    There could be 3 ‘levels’:

    1. Parent must consider CA of it’s ‘investment in subsidiary’.
    2. Subsidiary must consider CA of it’s assets (which will not include goodwill).
    3. Group accounts must consider CA of it’s subsidiary (Net assets plus goodwill).

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