The TMA Questions:
PART A
Access the Etisalat Company home web page and download: the annual report for 2020.
Note: this file is available at:
https://www.etisalat.com/en/system/com/assets/docs/annual-report/2020/en-2020-etisalat-
group-annual-report.pdf
Answer the following questions:
1) How does Etisalat Company account for goodwill, other intangible assets?
State the amounts of each intangible asset as it appears in the annual report for
2020. Support your answer by writing the page number in annual report.
(13 marks)
Etisalat is considered as the largest telecommunication company in the gulf. Its
headquarters are in Abu Dhabi, in the UAE. The company has approximately 11.6 customers
and over 300,000 enterprises ranging from small to medium and large (Etisalat, 2020, p. 107).
The company invested primarily in the telecommunication and business sectors within the
geographical locations. The company’s carrying value of goodwill was AED 11 million and its
impairment loss was AED 148 million annually. Nevertheless, the group's joint ventures and
associates' investments were AED 4250 million by the same date. The occurrences of a
triggering event assess the goodwill's carrying value according to the IAS 36 impairment of
assets (Etisalat, 2020, p.107). The investments in the joint ventures and associates are generally
assessed for impairments in the presence of indicators.
The company's annual report shows that the goodwill comes from the consolidation
report showing the excess of the acquisition cost of the identifiable asset (Etisalat, 2020, p.
135). It also uses some GAAP rules provided by the FASB, which allocates the goodwill in the
cash-generating units (CGUs). The intangible assets go through an impairment test that
involves a management judgment that needs an assessment to show if the assets’ carrying value
is supported by their net presence value based on the future cash flows in the assets. The assets
, use cash flow projections discounted at the right rate and supported by the net current worth.
Trade names and customer relationships are intangible assets, and they are recognized based on
the fair value amount during their acquisition. Each intangible asset year differs from the other,
and there is a 3 to 23 range in the customer usefulness period in the company. The trade names
are also useful for about 15 to 25 years.
The table below shows Etisalat’s 2020 financial year (Etisalat, 2020, p. 146).
Goodwill Licenses Trade Names Others TOTAL
(AED) (AED) (AED) (AED)
1st of 15,775,194,00 16,962,146,000 1,908,500,000 7,296,847,000 41,942,687,000
January in 0
the year
2020
Additions 50,793,000 971,026, 0001 1,021,819, 000
Transfer 606,415,000 606,415,000
from PP
Subsidiary 76,469,000 10,692,000 78,556,000 165,717,000
acquisition
Disposals 268,502,000 268,502,000
Exchange 920,113,000 848,257,000 175,435,000 537,654,000 2,481,459,000
differences
December 16,771,776,00 17,861,196,000 2,094,627,000 9,221,996,000 45,949,595,000
31st 2020 0
Other
Indefeasibl 332,011,000
e rights to
use
65,626,000
Customer
relationship
Computer 1,347,059,000
software
2) Does Etisalat Company make any acquisitions during 2020? and how do these
acquisitions affect the goodwill? Support your answer by writing the page
number in annual report. (5 marks)
PART A
Access the Etisalat Company home web page and download: the annual report for 2020.
Note: this file is available at:
https://www.etisalat.com/en/system/com/assets/docs/annual-report/2020/en-2020-etisalat-
group-annual-report.pdf
Answer the following questions:
1) How does Etisalat Company account for goodwill, other intangible assets?
State the amounts of each intangible asset as it appears in the annual report for
2020. Support your answer by writing the page number in annual report.
(13 marks)
Etisalat is considered as the largest telecommunication company in the gulf. Its
headquarters are in Abu Dhabi, in the UAE. The company has approximately 11.6 customers
and over 300,000 enterprises ranging from small to medium and large (Etisalat, 2020, p. 107).
The company invested primarily in the telecommunication and business sectors within the
geographical locations. The company’s carrying value of goodwill was AED 11 million and its
impairment loss was AED 148 million annually. Nevertheless, the group's joint ventures and
associates' investments were AED 4250 million by the same date. The occurrences of a
triggering event assess the goodwill's carrying value according to the IAS 36 impairment of
assets (Etisalat, 2020, p.107). The investments in the joint ventures and associates are generally
assessed for impairments in the presence of indicators.
The company's annual report shows that the goodwill comes from the consolidation
report showing the excess of the acquisition cost of the identifiable asset (Etisalat, 2020, p.
135). It also uses some GAAP rules provided by the FASB, which allocates the goodwill in the
cash-generating units (CGUs). The intangible assets go through an impairment test that
involves a management judgment that needs an assessment to show if the assets’ carrying value
is supported by their net presence value based on the future cash flows in the assets. The assets
, use cash flow projections discounted at the right rate and supported by the net current worth.
Trade names and customer relationships are intangible assets, and they are recognized based on
the fair value amount during their acquisition. Each intangible asset year differs from the other,
and there is a 3 to 23 range in the customer usefulness period in the company. The trade names
are also useful for about 15 to 25 years.
The table below shows Etisalat’s 2020 financial year (Etisalat, 2020, p. 146).
Goodwill Licenses Trade Names Others TOTAL
(AED) (AED) (AED) (AED)
1st of 15,775,194,00 16,962,146,000 1,908,500,000 7,296,847,000 41,942,687,000
January in 0
the year
2020
Additions 50,793,000 971,026, 0001 1,021,819, 000
Transfer 606,415,000 606,415,000
from PP
Subsidiary 76,469,000 10,692,000 78,556,000 165,717,000
acquisition
Disposals 268,502,000 268,502,000
Exchange 920,113,000 848,257,000 175,435,000 537,654,000 2,481,459,000
differences
December 16,771,776,00 17,861,196,000 2,094,627,000 9,221,996,000 45,949,595,000
31st 2020 0
Other
Indefeasibl 332,011,000
e rights to
use
65,626,000
Customer
relationship
Computer 1,347,059,000
software
2) Does Etisalat Company make any acquisitions during 2020? and how do these
acquisitions affect the goodwill? Support your answer by writing the page
number in annual report. (5 marks)
