Question

A CGU comprises back-office software (finite life) and a customer list (indefinite life). Recoverable amount is below carrying amount due to regulatory pricing caps. How do you allocate impairment?

Q: Answer-A CGU comprises back-office software (finite life) and a customer list (indefinite life). Recoverabl...

Impairment is allocated to assets in CGU except those constrained e.g., cannot be reduced below recoverable amount or fair value less costs of disposal.

A First to indefinite-life intangibles, then pro-rata

B Pro-rata to all assets in CGU, excluding goodwill

C First to goodwill; residual pro-rata

D Pro-rata to all assets except those with specific recoverable amounts > carrying

E Only to depreciable assets

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A CGU comprises back-office software (finite life) and a customer list (indefinite life). Recoverable amount is below carrying amount due to regulatory pricing caps. How do you allocate impairment?

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