IAS 36Chapter 8Lesson 2
Testing CGUs that carry goodwill
Step 1 of 9Learning objectives
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A CGU to which goodwill has been allocated is tested every year, on a fixed date, and whenever there is an indication, by comparing its carrying amount including goodwill with its recoverable amount. The lesson covers the timing of the test, reusing an earlier calculation, the order of testing (assets and CGUs before the whole that carries the goodwill) and Appendix C: the notional gross-up of goodwill when non-controlling interests are measured at their proportionate share of net assets.
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Learning objectives
- Explain when a CGU carrying goodwill must be tested (annual test on a fixed date, test on indication, combination in the current year) and the treatment of a CGU with no goodwill allocated to it.
- Calculate the impairment loss of a CGU carrying goodwill by comparing its carrying amount including goodwill with its recoverable amount.
- Determine the order of testing when assets, CGUs and the whole carrying the goodwill are tested at the same time or when an indication affects an asset.
- Calculate the notional gross-up of goodwill for non-controlling interests, then the loss actually recognised, and explain the issues raised by its split between the parent and the non-controlling interests.