Audit/IFRS Manager
338 Points
Joined September 2009
Well top down test says that we need to test goodwill/ assets with indefinite lives at the lowest of the cash generating unit level to which it belong and not at the level of whole company or department.
In case where the assets are not capable of being individually tested of impairment at their level (example: patent, goodwill) then in such case, identify the CGU to which this asset belong. After identifying compare the recoverable value of whole CGU with the carrying value of this particular asset and then conclude on its impairment. This is called Bottom up approach.