Goodwill impairment
• Done by• Sujith Paul
• Priya Upadhyay
• Saanchi Arora
• If the fair value is less than carrying value (impaired), the goodwill value needs to be reduced so the fair value is equal to carrying value.
• The impairment loss is reported as a separate line item on the income statement, and new adjusted value of goodwill is reported in the balance sheet.
Impairment of goodwill
• Comparison of fair value with the carrying value.
• If fair value is greater then there is no impairment loss
• If the fair value is less than than the carrying value there is an impairment loss.
Testing under US GAAP
• The recoverable amount of goodwill is compared with carrying value.
• If the recoverable amount is greater then goodwill then there is no impairment loss.
• If the recoverable amount is less than the carrying value then there is impairment loss.
Testing under IFRS
Goodwill impairment in two companies
Assets Note December 31,2012
December 31,2011
Held-to-maturity financial assets
4,11,17 9,224,328 9,902,422
Property and equipment
12,17 2,215,048 2,166,087
Goodwill 13 180,563 259,933Investments in associates
14 197,224 171,945
Investment properties
15 545,432 553,312
The difference in the goodwill in the balance sheet will be reflected in the Income statement.
Balance Sheet
(In millions of Won)
Note 2012 2011
Dividend income
29 80,593 80,593
Net trading income
30 106,344 116,324
Net impairment loss on goodwill
4 (79370) -
Net other operating expenses
35,42 (526,286) (551,966)
The loss amount should tally with the difference in balance sheet’s amount.
Foot notes to the financal statements.
Management discussion and analysis of annual repot
Income Statement
Goodwill impairment in
The difference in the goodwill in the balance sheet will be reflected in the Income statement.
Assets Note December 31,2014
December 31,2013
Plant and Equipment
4 3908 2959
Buildings 7 25956 13786
Goodwill 12 69213 85980
Deferred-tax asset
14 40 36
Investments 17 1540 760
Balance Sheet
The loss amount should tally with the difference in balance sheet ‘s amount.
Foot notes to the financal statements.
Management discussion and analysis of annual repot
(in thousands of dollars)
Note 2014 2013
Income tax expense
15 72915 58073
Depreciation 16 36821 31770
Impairment loss 18 16767 -
Finance costs 19 11808 18229
Finance income 20 (852) (1187)
Income Statement
Conclusion
Source : http://www.kpmg.com