CMA Final · Corporate Financial Reporting · Impairment of Assets (Ind AS 36)
Anand Ltd. tests a cash-generating unit with carrying amount Rs 200 lakh, including goodwill of Rs 30 lakh. The unit's recoverable amount is Rs 185 lakh. What is the total impairment loss, and how much of it is first applied against goodwill?
The total impairment loss is Rs 15 lakh, being 200 less 185. It is applied first to goodwill, which has Rs 30 lakh, so goodwill absorbs all Rs 15 lakh and other assets are unaffected.
- ARs 15 lakh; Rs 15 lakh against goodwillCorrect
- BRs 15 lakh; Rs 7.5 lakh against goodwill
- CRs 30 lakh; Rs 30 lakh against goodwill
- DRs 15 lakh; spread pro rata over all assets including goodwill
Explanation
Loss = 200 - 185 = Rs 15 lakh. The loss is first allocated to reduce goodwill allocated to the unit, and Rs 15 lakh is less than the goodwill of Rs 30 lakh, so the whole loss is absorbed by goodwill. Pro rata spreading applies only after goodwill is reduced to zero.
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