Cash-generating unit, goodwill and corporate assets: Unit B — plant and equipment

Context

The Hélion group (a fictitious group) manufactures industrial packaging at three sites: Lyon (unit A), Bordeaux (unit B) and Lille (unit C). Each site sells its output to its own customers and management monitors performance site by site. The goodwill of 300,000 arising on the acquisition of the Bordeaux site has been allocated to unit B. The head office building, which serves the three sites, does not generate cash inflows of its own. You are performing the annual test at 31 December 20X5.

Assignment

Workpaper Cash-generating unit, goodwill and corporate assets.

Purpose of the workpaper

Identify the unit tested, allocate its share of corporate assets, determine its carrying amount (goodwill notionally grossed up when non-controlling interests are measured at their share of net assets), compare it with the recoverable amount, allocate the loss first to goodwill and then pro rata to the other assets subject to their floor, and recognise only the share relating to the recognised goodwill.

Questions of the file covered by this workpaper

• Allocate the head office building to the three units.
• Calculate the carrying amount of unit B to be compared with its recoverable amount.
• Calculate the impairment loss of unit B.
• Allocate the loss between goodwill and the other assets.
• Which entry do you record at 31 December 20X5?

• ScheduleCarrying amounts and lives of the unitsOpen
• MinutesMinutes of the finance committeeOpen
• ScheduleDetail of unit BOpen
• DocumentValuation report on unit BOpen
• ExtractMarket studyOpen