New Enroll in RBI Grade B New Batch - Starts on May 21

    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?
    A Impair ₹110 crore immediately Correct Answer Incorrect Answer
    B Amortize goodwill over 5 years Correct Answer Incorrect Answer
    C Defer recognition of impairment loss Correct Answer Incorrect Answer
    D Revalue the assets Correct Answer Incorrect Answer

    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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