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