Impairment Testing: IAS 36 Value in Use, CGUs & Goodwill

What you'll build

What you will be able to do

Each lab ends with a concrete result that you build yourself and the checker confirms, cell by cell.

• Classify events at Corvane Industries as external, internal or no impairment indicators and run the market-capitalisation check.
• Calculate fair value less costs of disposal, the recoverable amount and the impairment loss for five Corvane assets.
• Discount five years of pre-tax cash flows of the Industrial Films CGU, add a growing terminal value and arrive at its value in use.
• Allocate Corvane’s goodwill to its three CGUs, build each CGU’s carrying amount and compare it with the recoverable amount.
• One year later the Labels CGU loses its largest customer. You calculate its impairment loss, charge goodwill first, spread the rest pro rata and reallocate what the buildings’ floor blocks.
• Allocate Corvane’s head office and IT platform to the three CGUs weighted by remaining useful life, test each CGU with its share and split the Films loss.
• Recalculate the Retail Packaging headroom for discount rates from 9 % to 14 %, chart it, and solve for the long-term growth rate at which the headroom disappears.
• Two years after the 2027 impairment the Labels CGU recovers. You roll the plant forward, cap the reversal at the depreciated original carrying amount and book the entries.