Allocating an Impairment Loss: Goodwill First, Then Pro Rata with a Floor
This lesson is part of the course
In this lesson
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.
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Lessons in this course
- Impairment Indicators: When Must You Test? (IAS 36.9–14) Locked
- Recoverable Amount: the Higher of FVLCD and Value in Use Locked
- Value in Use: Five-Year Cash Flows, Terminal Value & a Pre-Tax Rate Locked
- CGUs & Goodwill: Allocation and the Carrying Amount to Test Locked
- Allocating an Impairment Loss: Goodwill First, Then Pro Rata with a Floor Locked
- Corporate Assets: Allocating the Head Office to the CGUs Locked
- Sensitivity & Headroom: Break-Even Discount Rate and Growth Locked
- Reversing an Impairment (Never for Goodwill) & the Journal Entries Locked