IAS 36Chapter 8Lesson 1
Allocating goodwill to CGUs
Step 1 of 8Learning objectives
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Acquired goodwill produces no cash flows on its own: to test it, it must be allocated to the CGUs (or groups of CGUs) that benefit from the synergies of the combination, at the lowest level of internal monitoring and no larger than an operating segment. The lesson covers this level of allocation, the deadline for completing the initial allocation, and how to follow goodwill when an operation is disposed of or the CGUs are reorganised (relative values).
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Learning objectives
- Identify the CGUs or groups of CGUs to which goodwill is allocated, at the lowest level of internal monitoring and no larger than an operating segment.
- Justify the level of allocation in the light of internal monitoring and distinguish it from the level used for exchange differences (IAS 21).
- Determine the deadline for completing the initial allocation and its link with provisional accounting under IFRS 3.
- Calculate the goodwill included in the gain or loss on disposal of an operation and reallocate goodwill on a reorganisation, on a relative value basis.