F4 M8 Goodwill Including Impairment

Question 1

Under IFRS, when the carrying value of the CGU is greater than the recoverable amount of the CGU we will do this to adjust it

Answer 1

We will decrease goodwill by the difference

This is an impairment loss

Question 2

What does CGU stand for

Answer 2

Cash generating unit

Question 3

US GAAP requires that goodwill be tested for impairment at what level?

Answer 3

The reporting level

Question 4

IFRS requires that goodwill be tested for impairment at what level?

Answer 4

CGU level

Question 5

Under IFRS how do you calculate the recoverable amount?

Answer 5

It is the greater of:
The asset’s fair value less costs to sell vs.
The asset’s value in use

Question 6

US GAAP has two step sin calculating the impairment loss. Those are:

Answer 6

1. Figure the loss (fair value of the reporting unit less the carrying value of the reporting unit) to get the Goodwill implied fair value
2. Take the Goodwill implied fair value less the Goodwill book value

Question 7

Which comes first? Impairment testing of other assets or impairment testing of goodwill.

Answer 7

Impairment testing of other assets should come before testing for an impairment test for Goodwill