Document ID: chunk:federal_register_of_legislation:F2023C00180:reg:20:p2
Version: federal_register_of_legislation:F2023C00180
Segment Type: reg
Provision Reference: reg 20 (pt 2/17)
Character Range: 200504–203731

is a multinational manufacturing firm that uses geographical segments for reporting segment information. M's three reportable segments are Europe, North America and Asia. Goodwill has been allocated for impairment testing purposes to three individual cash-generating units—two in Europe (units A and B) and one in North America (unit C)—and to one group of cash-generating units (comprising operation XYZ) in Asia. Units A, B and C and operation XYZ each represent the lowest level within M at which the goodwill is monitored for internal management purposes.
IE81 M acquired unit C, a manufacturing operation in North America, in December 20X2. Unlike M's other North American operations, C operates in an industry with high margins and high growth rates, and with the benefit of a 10-year patent on its primary product. The patent was granted to C just before M's acquisition of C. As part of accounting for the acquisition of C, M recognised, in addition to the patent, goodwill of CU3,000 and a brand name of CU1,000. M's management has determined that the brand name has an indefinite useful life. M has no other intangible assets with indefinite useful lives.
IE82 The carrying amounts of goodwill and intangible assets with indefinite useful lives allocated to units A, B and C and to operation XYZ are as follows:

       Goodwill  Intangible assets with indefinite useful lives

       CU                                                        CU

A      350
B      450
C      3,000                                                     1,000
XYZ    1,200
Total  5,000                                                     1,000

IE83 During the year ending 31 December 20X3, M determines that there is no impairment of any of its cash-generating units or group of cash-generating units containing goodwill or intangible assets with indefinite useful lives. The recoverable amounts (ie higher of value in use and fair value less costs of disposal) of those units and group of units are determined on the basis of value in use calculations. M has determined that the recoverable amount calculations are most sensitive to changes in the following assumptions:

Units A and B                                                        Unit C                                                                              Operation XYZ

Gross margin during the budget period (budget period is 4 years)     5-year US government bond rate during the budget period (budget period is 5 years)  Gross margin during the budget period (budget period is 5 years)
Raw materials price inflation during the budget period               Raw materials price inflation during the budget period                              Japanese yen/US dollar exchange rate during the budget period
Market share during the budget period                                Market share during the budget period                                               Market share during the budget period
Growth rate used to extrapolate cash flows beyond the budget period  Growth rate used to extrapolate cash flows beyond the budget period                 Growth rate used to extrapolate cash flows beyond the budget period

IE84 Gross margins during the budget period for