CERTYNEX IFRS ACADEMY

The retailer Primavente acquires the logistics company Flexroute. The business plan shows that most of the synergies will come from lower delivery costs in two existing Primavente CGUs, North Stores and South Stores, monitored separately by management within the same operating segment. Flexroute forms a third CGU, which will also benefit from the synergies to a lesser extent. The accountant proposes to allocate all the goodwill to the Flexroute CGU, on the grounds that the acquired assets are there. Which analysis is correct?

The proposal is correct: goodwill always follows the identifiable assets of the acquiree.

Goodwill is allocated to the CGUs expected to benefit from the synergies, including North Stores and South Stores, even though no Flexroute assets are assigned to them.

Goodwill is allocated to the operating segment as a whole, which avoids having to analyse where the synergies lie.

Goodwill is not allocated to any CGU, since it does not generate independent cash flows.