P Co purchased an 80% interest in S Co, which has two divisions: Paints and Chemicals. Each of these two divisions has cash flows that are independent of each other. Hence, they are deemed as “cash-generating units” in accordance with IAS 36 Impairment of Assets. The goodwill paid by P Co for S Co was allocated to the two divisions as shown below. The following table shows the balances as at 31 December 20x5.

Required:
1. What is the impairment loss on goodwill, if any, that should be recognized by P Co in its consolidated financial statements for the year ended 31 December 20x5?
2. The allocation of goodwill to different cash-generating units may be an arbitrary process. Suggest how the allocation may be carried out meaningfully by P Co.

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Goodwill (P's share).. Goodwill (non-controlling interests' share).. Book value of identifiable net assets.. Unamortized balance of fair value adjustments .. Fair value of division... Value in use. Paints division $ 6,000,000 1,500,000 30,000,000 3,000,000 33,000,000 37,000,000 Chemicals division $ 7,000,000 1,750,000 43,000,000 5,000,000 56,000,000 50,000,000