IND AS 36 - Query on Goodwill

Financial Reporting

Hi sir Can you explain the logic behind why we are allocating Impairment loss first to goodwill And why reversal is prohibited for goodwill???

Barani Tharan

CA Final

★ 112K+

24-Feb-23 23:29

805

Answers (2)

When there is an impairment loss, it is first allocated to goodwill before it is allocated to specific assets within the company. This is because goodwill represents the overall value of the company and is often the value of the company's reputation, customer relationships, and other intangible assets that are difficult to quantify. reversal of impairment loss for goodwill is not allowed under Ind AS 36 because goodwill is an intangible asset with an indefinite useful life and therefore, cannot be amortized. Since the impairment loss is recognized due to a decrease in the value of goodwill, it is unlikely that the value of goodwill would recover in the future.

shivaji hari

CA Inter

★ 3K+

25-Feb-23 03:03

Internally generated goodwill cannot be recognised. In same way increase in value of goodwill cannot be recognised due to measurement issues. IMpairment first to goodwill because that is an asset which has not been amortised. For other assets there is a possibility to estimate recoverable amount in a better way.

CA Suraj Lakhotia

Admin

26-Feb-23 15:01