Blankbank Corporation has $150 million of goodwill on its books from the 2014 ac

Question

Blankbank Corporation has $150 million of goodwill on its books from the 2014 acquisition of Walsh Technology. Walsh is considered a cash-generating unit under IFRS. At the end of its 2016 fiscal year, management provided the following information for its annual goodwill impairment test ($ in millions):

Under IFRS, what amount of goodwill impairment loss, if any, should Blankbank recognize?

A. $100 million.

B. $60 million.

C. $50 million.

D. $45 million.

Blankbank Corporation has $150 million of goodwill on its books from the 2014 acquisition of Walsh Technology. Walsh is considered a cash-generating unit under IFRS. At the end of its 2016 fiscal year, management provided the following information for its annual goodwill impairment test ($ in millions):

Explanation / Answer

Answer:

The impairment loss = BV of walsh's net assets ( including goodwill) - Recoverable cost ( the recoverable cost is greater of the Fair value of Walsh less costs to sell and  Present value of estimated future cash flows)

The impairment loss = $500 - $455 = $45 million

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