Woolworths Case Study Draft
Part 1: Goodwill and Discontinued Operations
a) Carrying value of goodwill 24 June 2012
The carrying value of goodwill in Woolworth’s consolidated financial statements was $3221.8 Million (M) at 24 June 2012. This figure is included within ‘intangible assets’ on the consolidated balance sheet and exact amount is disclosed in the Note 11 of Notes to consolidated financial statements (Woolworths 2012, p 126).
b) Movements in carrying value of goodwill
The carrying value of goodwill at the beginning of the period was $3227.7M (Woolworths 2012, p 126). An additional $42.1M was recognised throughout the year due to additional acquisition of businesses, with less $1.5M for disposals and $0.7M for other expenses. Woolworths also recognised an impairment loss of $70.6M for the year. There was also an effect of movements in foreign exchange rates of $24.8M, which resulted in a carrying amount of $3221.8million at the end of the period (Woolworths 2012, p 126).
c) Impairment loss on goodwill
i) Impairment loss on Goodwill at 24 June 2012 was $70.6M.
ii) Woolworth’s accounting policy with respect to impairment testing of goodwill is consistent with AASB 139 Intangible Assets. Note 11 (Woolworths 2012, p 126) specifically states that intangible assets (such as goodwill) with indefinite useful lives are tested for impairment annually and when there is indication that the asset may be impaired, the impairment loss is recognised when the carrying amount exceeds the recoverable amount. Recoverable amount is further defined to be the higher of fair value less cost to sell and value in use.
iii) Impairment loss on goodwill was a result of Woolworth’s announcement to restructure and divest the Consumer Electronics Business. The amount is also disclosed as ‘discontinued operations’ in Note 33 (Woolworths 2012, p 96) for $366.2M. AASB 5.32 defined discontinued operations to be a part of an entity that represents a separate line, or part, of business or
a) Carrying value of goodwill 24 June 2012
The carrying value of goodwill in Woolworth’s consolidated financial statements was $3221.8 Million (M) at 24 June 2012. This figure is included within ‘intangible assets’ on the consolidated balance sheet and exact amount is disclosed in the Note 11 of Notes to consolidated financial statements (Woolworths 2012, p 126).
b) Movements in carrying value of goodwill
The carrying value of goodwill at the beginning of the period was $3227.7M (Woolworths 2012, p 126). An additional $42.1M was recognised throughout the year due to additional acquisition of businesses, with less $1.5M for disposals and $0.7M for other expenses. Woolworths also recognised an impairment loss of $70.6M for the year. There was also an effect of movements in foreign exchange rates of $24.8M, which resulted in a carrying amount of $3221.8million at the end of the period (Woolworths 2012, p 126).
c) Impairment loss on goodwill
i) Impairment loss on Goodwill at 24 June 2012 was $70.6M.
ii) Woolworth’s accounting policy with respect to impairment testing of goodwill is consistent with AASB 139 Intangible Assets. Note 11 (Woolworths 2012, p 126) specifically states that intangible assets (such as goodwill) with indefinite useful lives are tested for impairment annually and when there is indication that the asset may be impaired, the impairment loss is recognised when the carrying amount exceeds the recoverable amount. Recoverable amount is further defined to be the higher of fair value less cost to sell and value in use.
iii) Impairment loss on goodwill was a result of Woolworth’s announcement to restructure and divest the Consumer Electronics Business. The amount is also disclosed as ‘discontinued operations’ in Note 33 (Woolworths 2012, p 96) for $366.2M. AASB 5.32 defined discontinued operations to be a part of an entity that represents a separate line, or part, of business or