Hello Sir
I have a question about the understating of the calculation of impairment of goodwill.
Here is the format for impairment of goodwill calculation:
Book value of the net asset per question X
Fair value adjustment X
Goodwill at acquisition X
Impairment (balance). X
Recoverable amount X
I can understand the process of impairment of intangible assets(CGU).
But I cannot understand why we calculated the impairment of goodwill by adding net assets at year end and plus the goodwill at acquisition.
What dose “recoverable amount of goodwill” actually?
Could you please explain?
Thank you!
Ask the Tutor ACCA SBR
Understanding the impairment of goodwill
5y ago#1When we do an impairment calculation we have to compare the carrying amount of cash generating unit with its recoverable amount
The cash generating unit comprises the net assets of the subsidiary plus the goodwill arising
The the recoverable amount of the cash generating unit is, as you know, the cash that will be generated by that cash generating unit - i.e. subsidiary
So there is no such concept as the recoverable amount of goodwill
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