Home › CA Final › financialreporting › Ind AS 36 — Impairment Loss Recognition, CGU Identification, Goodwill Allocation to CGUs, Disposal within CGU › Entity A acquires Entity B for ₹50 mn. FV of ide…
Entity A acquires Entity B for ₹50 mn. FV of identifiable net assets ₹35 mn; allocated ₹25 mn to CGU 1 and ₹10 mn to CGU 2. Purchase consideration is allocated as ₹33 mn to CGU 1 and ₹17 mn to CGU 2 (synergies to CGU 2 from distribution channels). Goodwill per CGU using direct method:
AAll ₹15 mn to CGU 1
BEqual split ₹7.5 mn each
CCGU 1: ₹8 mn; CGU 2: ₹7 mn (= 33−25 and 17−10 respectively)
DAll ₹15 mn to CGU 2 (since synergies go there)
Answer & Solution
Correct answer: C. CGU 1: ₹8 mn; CGU 2: ₹7 mn (= 33−25 and 17−10 respectively)
Direct method: goodwill per CGU = (PC allocated to CGU) − (FV of identifiable assets allocated to CGU). CGU 1: 33−25 = ₹8 mn; CGU 2: 17−10 = ₹7 mn. Note that CGU 2's goodwill (₹7 mn) reflects the distribution synergies even though the acquired assets predominantly went to CGU 1.
Related questions
An impairment loss on a CGU is allocated to its assets — but the carrying amount of any inAn entity's CGU testing for the prior period included corporate-asset CA but the current pAn entity sells the output of an asset partially internally and partially externally. An aA bus company runs 5 routes under a municipal contract that requires minimum service on eaIf the initial allocation of goodwill acquired in a business combination cannot be COMPLETAn entity reorganises its reporting structure: CGU A's goodwill is being redistributed acrAn entity disposes of an OPERATION within a CGU to which goodwill was allocated. The goodwAn entity has a mine (CA ₹1,000) with a recognised restoration provision of ₹500 (PV of re