Forums
As 28
Accountancy
I gone through the classes but still it's not clear that what is the difference between Bottom up test and top down test. In both the impairment loss is primarily setoff with Goodwill and secondarily with carrying amnt. Then what is the difference? Kindly consider my queries. Im really confused. Video Details P1 - Accounting Standards - CA Inter (New) AS 28 9. Reversal of Impairment Loss
Answers (3)
Bottom-up Test Looks at individual assets first, then aggregates to the whole. Goodwill is tested separately from other assets. Top-down Test Starts with the whole (reporting unit), then allocates to individual assets, including goodwill.Both aim to set off impairment losses primarily with goodwill and then with other assets, but they differ in where they start the assessment process.
Say we have 3 CGUs - A, B & C. If goodwill can be allocated on reasonable basis we allocate goodwill to A, B & C and test for impairment of each CGU - This is bottom up. If Goodwill cannot be allocated on reasonable basis, we identify the next higher level CGU. Say combination of A, B & C and then test for impairment of all three CGU (larger CGU) including goodwill. This is top down.
Courses
Course Guides
Offerings
CIN: U74999TG2017PTC116012 | GSTIN: 36AAECI4332C1Z0 | PAN: AAECI4332C