In early 2001, Bike Away Corporation, began manufacturing and selling bicycles to high end retail stores. After its first 10 years of operations the company listed on the London Stock Exchange and now prepares consolidated IFRS financial statements for its fiscal years that end on December 31. Bike Away tests goodwill for impairment annually on November 30.

In 2011 Bike Away purchased a rival bike manufacturer for 15 million. Included in the transaction were a trademark valued at 4 million, and a specialized manufacturing process valued at 3 million. Goodwill was recorded at 5 million. Bike Away treated both the trademark and the specialized manufacturing process as indefinite-lived intangible assets.

On February 1, 2012, Bike Away acquired 100 percent ownership of a bike tire manufacturer. The tire manufacturer is identified as a cash generating unit. The acquisition reduced the cost associated with buying tires from third-party suppliers and for Bike Away to expand its operations by selling tires directly to retail stores. The founder of the tire company signed a two-year noncompete agreement. Ride Along paid cash of $20 million (the purchase price), which resulted in goodwill of $6 million and an intangible asset (a customer list) of 2 million.

During 2013, Bike Away continued to gain market share in the bicycle industry and determined it wanted to own retail stores. On June 1, 2013, Bike Away acquired 100 percent ownership of 10 independently owned retail stores. These 10 stores are collectively considered a cash-generating unit. Bike Away recorded 10 million of goodwill as part of the acquisitions.

As of December 31, 2018, before considering the departure of the tire companys founder, the fair value of Bike Away was 210 million (fair value by reporting unit is as follows: Bicycle, Tire, and Retail stores were 40 percent, 15 percent, and 45 percent, respectively) and the carrying value, including goodwill, was 145 million (carrying value by reporting unit is as follows: Bicycle, Tire, and Retail stores were 65 million, 20 million, and 60 million, respectively). During 2019, Bike Away changed its bike manufacturing process and moved away from the specialized aluminum process it acquired in 2011. Instead it shifted its production to carbon fiber that results in a super light road bike. There is no current market for the specialized process.

During 2019, the founder of the tire company resigned from Bike Away and started a new business (his noncompete agreement had expired by this time). With his departure, 45 percent of the customers on the tire companys original customer list (see above), that is included as an intangible asset on Bike Aways statement of financial condition, provided notice that they would no longer do business with Bike Away. The loss of these customers resulted in an impairment of the customer list intangible. These customers represent 35 percent of total future revenue for the tire reporting unit and the loss of these customers reduced the fair value of the tire unit by 35 percent. Even with the loss of the tire companys customers, Bike Away performed well because of the strength of its retail stores and strong bicycle sales leading to results that exceeded expectations. Therefore, Bike Away increased its revenue and operating income in its five-year forecast for bikes and tires as cash flows continue to be positive. Unfortunately as year-end approach the future of the retail market was not as strong as COVID-19 began its spread. Management estimates the fair value of the retail cash generating unit is reduced by 20%.

Assume the CEO is currently determining if assets are impaired, and if the impairment losses need to be recognized as of December 31, 2019.