Pharma is a group of companies listed in the EU reporting under IFRS Standards. The company develops and makes a large portfolio of pharmaceutical products, both for the healthcare and beauty markets. Pharma's customers include hospitals, governments, pharmacies and retail pharmacy and supermarket chains. The company has two divisions: Research & Development and Fabrication. In addition to working for the Pharma group, the Research & Development division also conducts research and development on behalf of smaller pharmaceutical companies and for governments.

On 1 October 20X0 the government awarded Pharma a ten-year licence to make a cancer- treatment drug. The licence was recognised on that date at its fair value of $9.8 million. As a result of the award of the licence, Pharma purchased a division of a competitor making similar products in 20X1 and merged it with its own activities, within its Specialist Drug sub-division, which is a separate cash-generating unit. Goodwill of $12 million was recognised on the purchase. By 20X6/20X7 the part of the Specialist Drug division producing the cancer drug amounted to about 5% of the revenues of the Group. On 1 May 20X7, the government revoked the licence on the grounds that Pharma had failed to meet some of the criteria of the licence. At the date of the decision, the net book value of the combined assets of the Specialist Drug division was $942 million (including the goodwill on the purchase of the competitor's business). No impairment losses had previously been recognised. As a result of this Pharma decided to sell the associated assets or redeploy them elsewhere within the Specialist Drug division. As part of an impairment test conducted after the decision fair value less costs to sell of the Specialist Drug division was estimated at $804 million. Revised estimated net cash inflows for the Specialist Drug division at the end of each of the next five years (taking into account sale or redeployment of the assets making the cancer drug) were estimated at $112 million for years 1-3, $130 million for year 4 and $1,014 million for year 5 assuming the disposal of the division after five years. An appropriate discount factor is 12%. Employees of the division were notified of the decision on 1 June and redundancy notices for those who could not be redeployed elsewhere were issued on that date. The estimated amount of redundancy payment was $400,000 which had not been paid by the year end as the division had not been shut down by that date.

Explain the implications of the above information for the financial statements for the year ending 30 September 20X7.