ALL THE WAY LTD” has two divisions (Frank and Ahmed) which currently employ the following net assets: Frank Ahmed £000 £000 Non-current assets Tangible 45,000 42,000 Intangible 1,500 - Goodwill - 1,800 The intangible asset of Frank relates to the cost of a patent acquired several years ago which has a net selling price of £1,200,000. The net fair value of Frank is £36,000,000 and £33,000,000 for Ahmed. Budgeted pre-tax cash flows for the next 3 years are as follows. Frank Ahmed £000 £000 Year 1 9,000 15,000
ALL THE WAY LTD” has two divisions (Frank and Ahmed) which currently employ the following net assets:
|
Frank |
Ahmed |
|
|
£000 |
£000 |
|
|
Non-current assets |
||
|
Tangible |
45,000 |
42,000 |
|
Intangible |
1,500 |
- |
|
|
- |
1,800 |
The intangible asset of Frank relates to the cost of a patent acquired several years ago which has a net selling price of £1,200,000. The net fair value of Frank is £36,000,000 and £33,000,000 for Ahmed. Budgeted pre-tax cash flows for the next 3 years are as follows.
|
Frank |
Ahmed |
|
|
£000 |
£000 |
|
|
Year 1 |
9,000 |
15,000 |
|
Year 2 |
12,000 |
15,000 |
|
Year 3 |
15,000 |
18,000 |
The required
REQUIRED:
(A) Calculate the extent of any impairment in each division
(B) Apportion the impairment loss and prepare the REVISED Statement of financial position.
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