CERTYNEX IFRS ACADEMY

Alba SA holds an interest in Brise SA, an associate, whose whole carrying amount is 1,800,000, including 200,000 of implicit goodwill. Following objective evidence of impairment, a colleague tests the goodwill separately and compares only the balance of 1,600,000 with the recoverable amount. What is the error?

The goodwill of 200,000 should have been allocated to the largest cash-generating unit of Alba's group, then tested with it rather than with the investment.

The carrying amount should have been compared with value in use, without considering fair value less costs of disposal.

The whole carrying amount of the net investment, including goodwill, must be tested as a single asset; goodwill is not tested separately.

The test should have been skipped, an equity-accounted investment remaining at its entry value until the associate is wound up.