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When an impairment loss is allocated within a CGU, the order of allocation under Ind AS 36 paragraph 104 is:
AOnly to assets recognised after the BC
BPro rata across all assets in the CGU
CFirst to PP&E, then intangibles, then goodwill
DFirst to goodwill allocated to the CGU; THEN to other assets pro rata on the basis of their carrying amounts — subject to the asset-floor (no asset reduced below max of FVLCTS, VIU, or zero)
Answer & Solution
Correct answer: D. First to goodwill allocated to the CGU; THEN to other assets pro rata on the basis of their carrying amounts — subject to the asset-floor (no asset reduced below max of FVLCTS, VIU, or zero)
Goodwill absorbs the impairment first (it represents the residual benefit). Remaining impairment is allocated pro rata across the other assets, subject to the floor — any unallocated residual due to floor protection is reallocated to other assets.
Related questions
Identify the statement about CGU disclosure under Ind AS 36 that is INCORRECT.When an impairment loss recognised in a prior period for a CGU is REVERSED:Multiple CGUs share the SAME key assumption (e.g. growth in a common end market) and the AAn entity's CGU recoverable amount is based on VIU. The discount rate disclosure required An entity uses a SENSITIVITY disclosure when a reasonably possible change in a key assumptWhen projecting cash flows beyond the period covered by management's most recent budgets/fWhen an entity discloses a CGU to which significant goodwill is allocated and recoverable An entity tests goodwill annually. The most recent detailed RA calculation for a CGU excee