P4.13 Goodwill impairment P Co purchased an 80% interest in S Co, which has two divisions: Paints and Chemicals. Each of these two divisions has cash flows that are independent of each other. Hence, they are deemed as "cash-generating units" in accordance with IAS 36 Impairment of Assets. The goodwill paid by P Co for $ Co was allocated to the two divisions as shown below. The following table shows the balances as at 31 December 20x5. Paints division Chemicals division Goodwill (P's share)... . . .. .......... $ 6,000,000 $ 7,000,000 Goodwill (non-controlling interests' share) 1,500,000 1,750,000 Book value of identifiable net assets.......comanddrill 30,000,000 43,000,000 Unamortized balance of fair value adjustments. . .... .. . . . .. . ..if 3,000,000 5,000,000 Fair value of division. . . . .. . 33,000,000 56,000,000 Value in use . . . . . . ... 37,000,000 50,000,000 Required: 1. What is the impairment loss on goodwill, if any, that should be recognized by P Co in its consolidated financial statements for the year ended 31 December 20x5? 2. The allocation of goodwill to different cash-generating units may be an arbitrary process. Suggest how the allocation may be carried out meaningfully by P Co