Question

Consolidation schedule:				Consolidation income statement
	$000	$000	$000
	Swift	Wren	Adjust
Gross profit	1,730	658	-	2,388
Expenses	(825)	(448)	-	(1,273)
Operating profit	905	210	-	1,115
Interest paid	(24)	(18)	-	(42)

On the basis of an impairment review it is found that 25,000$ of goodwill Swift paid when it acquired Wren should be written off. What is the consolidated profit before tax?

Answer 1

Based on the given data, it is understood that the said goodwill is recognised when SWIFT has acquired WREN in the past. Hence it is assumed as a recognise Good will. As per the prevailing standards IFRS 3, this cannot be amortised, however, tested for impairment at periodic intervals.

Once the goodwill is recognised and any further impairment charge need to be taken to Profit and Loss Account directly as an operating expense as per IFRS and not through Other Comprehensive Income (OCI). Given this, the Consolidated Profit before Tax shall be 1048 (in $000).