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  • In the event that the recoverable amount of the cash-generating units or groups of cash generating units is lesser than the underlying carrying amount of the cash-generating unit or groups of cash generating units, the resultant impairment loss is apportioned on a first time basis in order to reduce the carrying amount of any goodwill on acquisition that was allocated to the underlying cash generating units (CGU) and then later, it is affected to the other classes of assets within the cash-generating units or groups of cash generating units on a pro rata in regards to the basis of the immediate carrying amount of each and every asset within the cash generating unit. In the event of an impairment loss related to for goodwill on acquisition, it is recognized immediately within the profit or loss and it is, under no circumstance reversed in a subsequent financial period (JB Hi-FI 67-68).

In the event that the recoverable amount of the cash-generating units or groups of cash generating units is lesser than the underlying carrying amount of the cash-generating unit or groups of cash generating units, the resultant impairment loss is apportioned on a first time basis in order to reduce the carrying amount of any goodwill on acquisition that was allocated to the underlying cash generating units (CGU) and then later, it is affected to the other classes of assets within the cash-generating units or groups of cash generating units on a pro rata in regards to the basis of the immediate carrying amount of each and every asset within the cash generating unit. In the event of an impairment loss related to for goodwill on acquisition, it is recognized immediately within the profit or loss and it is, under no circumstance reversed in a subsequent financial period (JB Hi-FI 67-68). Essay Example

Accounting for Goodwill Acquisition: JB HI-FI Limited

Goodwill acquisition for the company is fairly stipulated within notes of the 2013 annual report under the intangible assets section. Goodwill for the company represents the excess of the amount used for acquiring, over a fair value, the entity’s immediate share of the net identifiable assets of the acquired entity or associate at the exact date for which the activity of acquiring took place. Significantly, it is noted that goodwill on all acquisitions of the business entities are included within the intangible assets section of the company (JB Hi-FI 67). Notably, the goodwill on acquisitions of any associates is included within the “investments in associates” section of the annual reports. Subsequently, the amount of goodwill in acquisition is never amortized in any manner but it is rather tested for impairment on annual terms, or in other cases, it is tested frequently in the course that the prevailing alterations of events or circumstances postulate a possibility that it might be impaired (JB Hi-FI 67). For these cases, the goodwill on acquisitions is carried at cost less the underlying accumulated losses attributed to impairment of the assets. In consequence, any possible gains or losses on the immediate disposal of an entity include the carrying amount of goodwill that is closely related to the entity that has been sold.

For the immediate purpose of testing the intangible asset impairment nature, the company’s goodwill is assigned to each and every of the entire Group’s cash-generating sub-sections or in other cases in group’s of cash-generating units. These allocations are expected to benefit from the incorporation of the business combination process. Distinctively, the cash-generating units, or in other cases group’s CGU’s, for which the goodwill on acquisition has been apportioned are also tested for impairment on an annual basis or in other cases tested frequently in the event that there are alterations in circumstances that might postulate that the goodwill on acquisition will be likely impaired (JB Hi-FI 67-68).

In the event that the recoverable amount of the cash-generating units or groups of cash generating units is lesser than the underlying carrying amount of the cash-generating unit or groups of cash generating units, the resultant impairment loss is apportioned on a first time basis in order to reduce the carrying amount of any goodwill on acquisition that was allocated to the underlying cash generating units (CGU) and then later, it is affected to the other classes of assets within the cash-generating units or groups of cash generating units on a pro rata in regards to the basis of the immediate carrying amount of each and every asset within the cash generating unit. In the event of an impairment loss related to for goodwill on acquisition, it is recognized immediately within the profit or loss and it is, under no circumstance reversed in a subsequent financial period (JB Hi-FI 67-68).

Works Cited

JB HI-FI, 2013 annual report. Retrieved on June 4, 2014 from http://www.jbhifi.com.au/documents/reports/128_2013-09-13_5-05-43.pdf