IAS 36Chapter 10Lesson 1
Allocating an impairment loss within a CGU
Step 1 of 9Learning objectives
Go deeper+2 deeper insights · +1 calculation · +1 journal entry
Once a CGU's loss has been calculated, you must say which assets bear it. IAS 36 sets an order: goodwill first, then the other assets pro rata on the basis of their carrying amounts, never taking an asset below its floor (the highest of its fair value less costs of disposal, its value in use and zero); the amount blocked by a floor is reallocated to the other assets. The lesson also covers the asset whose recoverable amount cannot be determined and the remainder that cannot be allocated.
30 minNot started
Learning objectives
- Allocate a CGU's loss first to the allocated goodwill, then to the other assets pro rata on the basis of their carrying amounts.
- Apply each asset's floor (the highest of its fair value less costs of disposal, its value in use and zero) and reallocate the remainder.
- Record the loss allocated between goodwill and the assets of the CGU, including for a revalued asset.
- Determine the treatment of an asset whose recoverable amount cannot be determined and of a remaining loss that cannot be allocated.