Under IAS 36 Impairment of Assets, the impairment testing of goodwill occurs at the:
A) level of the entity itself;
B) combined segments level;
C) operating division level;
D) lowest level at which goodwill is allocated to cash-generating units.

Question

Quizplus · Accepted Answer

The impairment testing of goodwill under IAS 36 occurs at the lowest level at which goodwill is allocated to cash-generating units. This means that each individual cash-generating unit should be assessed for impairment, and if the carrying amount of the unit exceeds its recoverable amount, then an impairment loss should be recognized. Goodwill is allocated to cash-generating units on a pro-rata basis, based on the relative fair values of the units.

Under IAS 36 Impairment of Assets, the Impairment Testing of Goodwill