CERTYNEX IFRS ACADEMY

Alba SA holds 35% of Brise SA, an associate accounted for under the equity method. Since the acquisition, a new law has banned Brise's main product, which has caused serious financial difficulties for it (facts of the case). What should be concluded for Alba's investment in Brise?

The facts are objective evidence of impairment arising after initial recognition: an impairment test of the net investment is required.

A test is not required as long as Brise keeps paying dividends, even if its prospects deteriorate significantly.

The goodwill of the investment must be tested separately, the net investment remaining measured under the equity method with no further review.

The equity method must stop as soon as the difficulties appear, the investment being remeasured at fair value through profit or loss.