Intangible Assets (F4)

Question 1

IFRS Goodwill Impairment

Answer 1

Recoverable Amount of CGU - Total Carrying Amount = Impairment

Question 2

Goodwill using PV of Excess earnings

Answer 2

FV Net Assets * Average Industry Return = Expected earnings = 3,500 * .10 = 350

Average annual income - expected earnings = excess earnings = 900 - 350 = 550

Goodwill = PV of earnings at risk adjusted return = 550 * 6.71008
= 3,691

Purchase price = FV Assets + goodwill = 3,691 + 3,500 = 7,191