ABC Ltd has determined that one of its cash-generating units (CGUS) has sustained an impairment loss of $50 000. The carrying amount of the assets within the CGU are as follows. Asset 1 Asset 2 Asset 3 Total $ 150 000 200 000 50 000 400 000 The estimated fair value less costs of disposal of Asset 2 is $190 000, which is greater than its value in use. Required In accordance with IAS 16 Property, Plant and Equipment and IAS 36 Impairment of Assets, calculate the amount of impairment loss allocated to the three assets, and the carrying amounts of the assets after the allocation. Prepare relevant journal entries. Show workings and calculations.

ABC Ltd has determined that one of its cash-generating units (CGUS) has sustained an impairment loss of $50 000. The carrying amount of the assets within the CGU are as follows. Asset 1 Asset 2 Asset 3 Total $ 150 000 200 000 50 000 400 000 The estimated fair value less costs of disposal of Asset 2 is $190 000, which is greater than its value in use. Required In accordance with IAS 16 Property, Plant and Equipment and IAS 36 Impairment of Assets, calculate the amount of impairment loss allocated to the three assets, and the carrying amounts of the assets after the allocation. Prepare relevant journal entries. Show workings and calculations.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

ABC Ltd has determined that one of its cash-generating units (CGUs) has sustained
an impairment loss of $50 000. The carrying amount of the assets within the CGU
are as follows.
Asset 1
Asset 2
Asset 3
Total
$
150 000
200 000
50 000
400 000
The estimated fair value less costs of disposal of Asset 2 is $190 000, which is
greater than its value in use.
Required
In accordance with IAS 16 Property, Plant and Equipment and IAS 36 Impairment of
Assets, calculate the amount of impairment loss allocated to the three assets, and
the carrying amounts of the assets after the allocation. Prepare relevant journal
entries. Show workings and calculations.

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Step 2: Determination of the recoverable amount of the cash-generating unit (CGU)

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Step 3: Calculation of the impairment loss

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Step 4: Allocation of the impairment loss to individual assets

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Step 5: Carrying Amount after Impairment Loss:

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Step 6: The journal entry to record the impairment loss would be as follows:

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