Exam 27: Business Combinations

Diamond Entity has three cash generating units located in various parts of Eurasia. Below is information regarding the three CGU's. Determine if there is impairment in any of the cash generating units. If so, determine what portion should be allocated to goodwill and other assets. $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\text { Information about CGU's }$ CGU 1 CGU 2 CGU 3 Carrying amount (including goodwill) 300,000 250,000 430,000 Carrying amount of goodwill 60,000 40,000 85,000 Fair value less costs to sell 310,000 175,000 390,000 Value in use 290,000 180,000 400,000 Recoverable amount Indicated impairment Impairment of goodwill Impairment of other assets

General and administrative expenses related to maintaining an internal acquisitions department may be expensed as acquisition costs.

Any tax benefits arising from the difference between the income tax basis and the IFRS carrying amount for goodwill should be accounted for as any other temporary difference at the date of acquisition.

Plant Entity acquires Seed Entity by purchasing 40,000 of Seed Entity's 50,000 shares for $20/share. The fair value of Seed Entity's net identifiable assets is $750,000. What is the difference in goodwill recognized between the fair value method and the NCI's share of net identifiable assets method?

Entity A acquires all the inputs and processes of Entity B. However, Entity A later disposes of the processes of Entity B to merge the inputs of Entity A with its own processes. Entity A should account for this transaction as a business combination.