Question
Post-merger, the acquirer reports a goodwill of ₹120
crore, 40% higher than the net assets acquired. Upon impairment testing, only ₹10 crore is recoverable. What should be the accounting treatment?Solution
Goodwill must be tested for impairment annually. If recoverable amount is ₹10 crore, the difference of ₹110 crore must be expensed immediately as impairment loss.
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