ACCA SBR 2026: How to Allocate a CGU Impairment Loss (IAS 36) Without Losing Marks

Impair the wrong assets and the marks vanish — even if your total is right

When you test a cash-generating unit under IAS 36, you don't write the loss off against whatever you fancy. Goodwill takes the hit first, then the remaining non-current assets pro-rata — and current assets never get touched. SBR candidates lose easy marks here every sitting by ignoring that order.

Why CGU impairment keeps catching SBR students out

IAS 36 is one of six standards the SBR examiner tests in almost every paper, alongside IFRS 15, 16, 9, 3 and IAS 37. It looks like a calculation, so students rush it. But the marks aren't really in the arithmetic — they're in knowing what goes into the unit and how the loss is split.

The March/June 2025 SBR examiner's report is blunt about it: candidates know the impairment indicators but stumble on the mechanics — what to include in the carrying amount, and how to allocate the loss once they've found it.

The three errors that cost the most

Throwing current assets into the unit. Inventory is tested under IAS 2, receivables under IFRS 9. They are not part of the CGU carrying amount you compare to recoverable amount. Add them in and your whole figure is wrong before you start.

Allocating the loss to the wrong things. IAS 36.104 is clear: goodwill first, then the remaining loss pro-rata across the other non-current assets. You never write it down against current assets, and you never dump the whole loss on one asset.

Reversing goodwill. Once goodwill is impaired, it stays impaired. IAS 36.124 forbids the reversal in a later period — no exceptions. State it when the scenario tempts you, and bank the mark.

Worked example: allocating a £40,000 loss

A CGU contains goodwill of £20,000, a building of £100,000 and plant of £80,000. It also holds inventory of £30,000 and receivables of £20,000. The recoverable amount is £160,000.

Wrong answer: carrying amount of £250,000 (everything added together), impairment of £90,000, spread across all five items. You've impaired inventory and receivables that should have been tested under their own standards, and overstated the loss.

Correct answer: the CGU carrying amount is £200,000 — goodwill plus building plus plant only. Compared with the £160,000 recoverable amount, that's a £40,000 loss. Write off the £20,000 goodwill first. Allocate the remaining £20,000 pro-rata across building and plant (100:80), so £11,111 to the building and £8,889 to the plant. Inventory and receivables are left exactly as they were.

What to do before your next sitting

Build the carrying amount deliberately. Before you compare anything, list what's in the unit and strike out every current asset. Half the marks are gone if that base figure is wrong.

Memorise the waterfall. Recoverable amount = higher of fair value less costs to sell and value in use. Loss hits goodwill, then non-current assets pro-rata, never below an individual asset's own recoverable amount. Write it on your scratch pad as the question opens.

Show the allocation working. The examiner gives marks for the steps, not just the answer. Candidates conclude too fast and skip the pro-rata split — that's where the available marks sit.

Bottom line

SBR pass rates hover around 48–50%, so roughly half the room fails every sitting. Impairment isn't where you want to be guessing. Strip out the current assets, follow the waterfall, show the split — and a question students dread becomes three or four reliable marks.