Goodwill Valuation & Impairment Model (IFRS 3 / IAS 36)

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A comprehensive Excel-based model for goodwill allocation, valuation, and impairment testing.

Overview

The PDMM Goodwill Valuation & Impairment Model is a robust and professionally structured Excel tool built to perform purchase price allocation (PPA), goodwill computation, and impairment testing in line with IFRS 3 and IAS 36 standards.

This model automates the entire workflow — from acquisition accounting to value-in-use (VIU) calculations and recoverable amount determination — providing finance professionals with a complete, transparent, and audit-ready solution.

Purpose of the Model

This model helps businesses and advisors determine:

• The amount of goodwill arising from an acquisition (under IFRS 3).
• The allocation of goodwill to Cash-Generating Units (CGUs).
• Whether goodwill impairment is required under IAS 36.
• The recoverable amount based on VIU and/or FVLCD methods.

It can also be used as a valuation model for scenario planning, acquisition due diligence, or annual impairment reviews.

Key Features

IFRS-Compliant Framework

• Follows IFRS 3 (Business Combinations) and IAS 36 (Impairment of Assets).
• Fully transparent assumptions and calculation structure.
• Step-by-step workflow with built-in integrity checks.

Dynamic DCF Valuation

• Calculates Value-in-Use (VIU) for each CGU.
• 10-year forecast horizon (Pro version) or 5-year (Basic version).
• Integrates CAPM-based WACC, perpetual growth rate, and discounting factors.

Multi-CGU Functionality

• Analyze up to 5 CGUs simultaneously (Pro version).
• Each CGU has its own revenue, margins, capex, working capital, and terminal value assumptions.

Scenario Analysis

• Built-in Base / Bull / Bear scenarios for sensitivity and stress testing.
• Separate controls for discount rate and growth rate assumptions.

Visual Dashboards & KPIs

• Professionally designed Dashboard sheet with live charts:
  • Goodwill allocation
  • FCF trends by CGU
  • Carrying vs. Recoverable comparison
  • VIU distribution
  • Sensitivity heatmap (WACC × g∞)
• Auto-updating visuals and summary outputs.

PPA & Acquisition Accounting

• Detailed Purchase Price Allocation (PPA) section for identifying intangible assets and liabilities.
• Auto-computes total goodwill, NCI adjustments, and FV reconciliations.

Built-In Validation Checks

• Automated alerts for negative goodwill, out-of-range WACC/g∞, and data inconsistencies.
• Ensures all CGUs and total goodwill reconcile perfectly.

Model Structure

Sheet Purpose

• Instructions
  • User guide, navigation, and color legend
• Inputs & Scenarios
  • Key assumptions, WACC, growth rates, and scenarios
• PPA & Goodwill
  • Acquisition accounting, FV of assets & liabilities, goodwill calculation
• CGUs
  • Allocation of goodwill to each CGU
• DCF (CGU VIU)
  • 10-year discounted cash flow for each CGU
• Impairment (CGUs)
  • Recoverable amount, impairment loss, and carrying comparison
• Sensitivity
  • WACC × g∞ matrix with heatmap visualization
• Dashboard
  • Interactive charts and executive summary
• Checks
  • Integrity validations and tie-outs

Key Calculations

• Goodwill = Purchase Consideration + NCI + FV of Previously Held Interest − FV of Identifiable Net Assets
• FCF = NOPAT + Depreciation & Amortization − Capex − ΔWorking Capital
• Terminal Value = FCFₙ × (1 + g∞) / (WACC − g∞)
• VIU = Σ (FCF / (1+WACC)ᵗ) + Terminal Value discounted to present
• Impairment = MAX(0, Carrying Amount − Recoverable Amount)

Who Can Use This Model

• Financial Analysts & Valuation Specialists
• Audit & Assurance Professionals
• Corporate Finance & FP&A Teams
• Investment Bankers & M&A Advisors
• Business Owners performing goodwill tests

Editions

• Basic (Free) 5-year single-CGU model with basic charts and checks.
• Pro (Paid) 10-year multi-CGU version with full scenario engine, dashboard, and executive summary.

Need a Custom Financial Model?

If you need a customized version of this model or would like to request a different financial model (for any industry or purpose), feel free to reach out directly.

PDMM can develop advanced Excel-based financial models — including feasibility studies, valuation templates, IFRS-compliant frameworks, and business forecast tools — tailored to your exact requirements.