3. (a) IAS 36 Impairment of Assets provides accounting guidance for the impairment of non-current assets. Requirement: Explain what a cash-generating unit (CGU) is and how an impairment loss in a CGU should be accounted for in accordance with IAS 36.< (b) The carrying amounts of the assets of a cash-generating unit (CGU) are as follows: Goodwill Patents and copyrights Property, plant and equipment< 2 £000 50,000 50,000 150,000 250,000 E J o There is evidence to indicate that the CGU is impaired. The recoverable amount of the CGU is £180,000. The fair value less costs of disposal for the patents and copyrights is estimated at £35,000 and the fair value less costs of disposal for the property, plant and equipment is estimated at £140,000. < Requirement: Calculate the amount of the impairment loss and explain how this should be allocated between the assets of the CGU.< (c) Explain how IFRS 13 Fair Value Measurement establishes a fair value hierarchy to categorise inputs used to measure fair value.
3. (a) IAS 36 Impairment of Assets provides accounting guidance for the impairment of non-current assets. Requirement: Explain what a cash-generating unit (CGU) is and how an impairment loss in a CGU should be accounted for in accordance with IAS 36.< (b) The carrying amounts of the assets of a cash-generating unit (CGU) are as follows: Goodwill Patents and copyrights Property, plant and equipment< 2 £000 50,000 50,000 150,000 250,000 E J o There is evidence to indicate that the CGU is impaired. The recoverable amount of the CGU is £180,000. The fair value less costs of disposal for the patents and copyrights is estimated at £35,000 and the fair value less costs of disposal for the property, plant and equipment is estimated at £140,000. < Requirement: Calculate the amount of the impairment loss and explain how this should be allocated between the assets of the CGU.< (c) Explain how IFRS 13 Fair Value Measurement establishes a fair value hierarchy to categorise inputs used to measure fair value.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:3. (a) IAS 36 Impairment of Assets provides accounting guidance for the impairment of non-current
assets.
Requirement:
Explain what a cash-generating unit (CGU) is and how an impairment loss in a CGU should be
accounted for in accordance with IAS 36.<
(b) The carrying amounts of the assets of a cash-generating unit (CGU) are as follows:
2
Goodwill
Patents and copyrights
Property, plant and equipment
J
£000
50,000
50,000
150,000
250,000
E
2
2
J
There is evidence to indicate that the CGU is impaired. The recoverable amount of the CGU is £180,000.
The fair value less costs disposal for the patents and copyrights is estimated at £35,000 and the fair
value less costs of disposal for the property, plant and equipment is estimated at £140,000. <
Requirement:<
Calculate the amount of the impairment loss and explain how this should be allocated between the
assets of the CGU.<
(c) Explain how IFRS 13 Fair Value Measurement establishes a fair value hierarchy to categorise
inputs used to measure fair value.
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