Discuss to what extent you believe that both purchased and non-purchased intangible assets should be treated in the same accounting manner.

Identifiable intangible assets should be treated, for all accounting purposes, identically with tangible assets. Discuss.

Explain what you understand by the term: recoverable amount.

On 30 December 2021 Parent plc acquired 80% of the share capital f Subsidiary plc for 900m. At this date, the fair value of the Subsidiarys identifiable net assets was 600m. Parent plc estimates the fair value of non-controlling interests to be 185m. Subsidiary plc was treated as a single cash-generating unit and goodwill arising from this acquisition was allocated to this unit only. The directors have agreed to comply with the requirements of IFRS 3 Business Combinations. Due to an economic downturn year, loss of consumer confidence and collapse of its export markets, Subsidiary Plc experienced difficult trading conditions during 2022. Following external advice, the company has now carried out an impairment review. It showed that the recoverable amount of Subsidiary plcs identifiable net assets was 950m on 31 December 2022. At this date, the carrying book value of its net identifiable assets was 560m, after deducting all depreciation expenses for this reporting period. There was not any other information showing evidence of obvious impairment to specific assets. Parent Plcs financial year ends on 31 December 2022.

Calculate the amount of goodwill arising on the acquisition of shares in Subsidiary Plc using both fair value (full) goodwill and proportionate (partial) goodwill methods and the associated impairment loss. Explain the basis of your calculations.

The directors of a company decided to review a cash-generating unit on 31 May 2022 following the requirements of IAS 36, Impairment of Assets. The impairment review of the cash-generating unit showed that it has a net realisable value of 22 million and a value in use of 21 million.

Immediately prior to the impairment review, the carrying values of the assets of the cash-generating unit were as follows:

	000
Goodwill	7,000
Property, plant and equipment	21,000
Net current assets	5,000
	33,000

The impairment review also indicated that an item of a plant (included in the above figure of 21 million) with a carrying value of 1.5 million had been severely damaged and was virtually worthless. There was no other evidence of obvious impairment of specific assets.

What is the carrying value of goodwill relating to the unit immediately after the results of the impairment review in accordance with IAS 36?

(Show working out)