Impairment of Goodwill

[hei.so]

This question comes from the Dagmar case in FRA.
“I do not think we have to consider it impaired because the remaining goodwill from the acquisition has not been fully written off.”
This statement is apparently true. Why? The reasoning is “Goodwill is not tested separately for impairment for investments using the equity method.”
I thought goodwill was tested annually for impairment?
Also based on the statement if a company is considered impaired, does that mean goodwill is the first thing to be written off?

 

[Gebura]

Are you asking about the equity method or about the acqusition method? Under the first one the goodwill is included in the carrying amount of the investment (i.e. it’s not separately recorded) so you check whether the whole carrying amount is lower than the fair value/ recoverable amount and you descrease it, if needed. In other words, under the equity method you don’t write off specifically the goodwill, you decrease the whole booked amount of the investment.