Answered: December 31, 2020, the Shell Corp, a…

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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Problem 2:
On December 31, 2020, the Shell Corp, a publicly accountable entity found that a CGU had possible indicators of impairment.
As such an impairment test needs to be conducted. The relevant data on the CGU is as follows:
Carrying values: Fair Values:
Land 750,000 1,000,000
Building 1,500,000 1,350,000
Equipment 600,000 80,000
Goodwill 550,000 n/a
Total 3,400,000 2,430,000
Value in use 2,600,000
Costs to sell would amount to 6% of the fair values of the assets

Required-
Calculate the impairment loss (if any) for the CGU. If there is an impairment loss for the CGU, allocate the loss to the assets of the CGU. No journal entries required just perform the calculations/allocations.

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