Any unallocated impairment should be reallocated to the CGU's other assets, subject to the same limits. This could result in a process that continues until the impairment loss is fully allocated or until each of the CGU's assets have been reduced to the highest of each asset's fair value less costs to sell, value in use and zero. The recognition of impairment loss should not, however, result in recognition of a liability, unless it meets the definition of a liability under another IFRS.
IFRS 3, Business Combinations, brings in new requirements for the allocation of impairment losses when dealing with goodwill. An entity that acquires a partial interest in a subsidiary can choose on an acquisition-by-acquisition basis how to measure the non-controlling interest (NCI). It can be measured at the NCI's proportionate share of the fair value of the subsidiary's identifiable net assets at the date of acquisition or at the fair value of the NCI at the acquisition date.
An entity's choice of method will affect the amount of goodwill that will be recognised in the consolidated financial statements. Under the partial goodwill method, only the holding company's share of the goodwill is recognised; under the full goodwill method, goodwill includes both the holding company's and the NCI's share of the goodwill in the subsidiary.
Management should consider the measurement method's impact on their impairment test when choosing how to measure an NCI under IFRS 3. Entities will need to keep records of each component of their goodwill balances.