Grace Limited acquired business (cash-generating units) of Venus Limited on 31st March 2023 for ₹ 8,000 Lakhs. The details of acquisition are as…

(i) Calculation of Value in Use (VIU) as at 31-03-2025 Year Cash flow (in lakhs) PV factor @10% PV (in lakhs) 2025-26 1,000 0.909 909.00 2026-27 800 0.826 660.80 2027-28 700 0.751 525.70 2028-29 800 0.683 546.40 2029-30 600 0.621 372.60 2030-31 500 0.564 282.00 Total VIU 3,296.50 Value in Use (rounded) = ₹ 3,297 lakhs (ii) Impairment loss to be recognised for the year ended 31st March, 2025 Impairment loss required = Carrying amount - Recoverable amount = ₹5,700 – ₹ 3,297 = 2,403 lakhs. (iii) Revised carrying amount of identifiable asset = ₹4,500 – ₹1,203 = 3,297 lakhs Calculation of Impairment Loss and revised carrying amount Goodwill Identifiable Assets CGU Total Acquisition cost on 31st March’2023 2,000 6,000 Less: Amortization- (Cost/5)*2 / Depreciation (Cost/8)*2 for 2 years 800 1500 1,200 4,500 5,700 Recoverable Amount (See Note below) 3,297 Impairment Loss to be recognised 2,403 Allocation of impairment loss (See Note) 1,200 1,203 Carrying amount after impairment 0 3,297 Note: 1. Recoverable amount and impairment test Fair value less costs to sell for the identifiable asset given = ₹ 3,000 lakhs. (Note: fair value less costs to sell of whole CGU not provided; value in use of CGU computed above.) Recoverable amount of the CGU = higher of Value in Use (3,297) and Fair value less costs to sell (use value for comparison). → Recoverable amount = ₹ 3,297 lakhs (since 3,297 > 3,000). Carrying amount (pre-impairment) = 5,700 lakhs. Impairment loss required = Carrying amount - Recoverable amount = ₹5,700 - ₹3,297 = ₹2,403 lakhs. 2. Allocation of impairment loss As per AS 28 impairment loss for a cash-generating unit is allocated first to reduce goodwill carrying amount to zero, and then to other assets of the unit pro-rata (or as required) so that carrying amount after allocation equals recoverable amount.