(ii) Oracle Plc owned100% of the equity share capital of Red Plc, a wholly owned subsidiary. The assets at the reporting date of Red Plc were as follows: £000 Goodwill 2,400 Buildings 6,000 Plant and equipment 5,200 Other intangibles (patent) 2,000 Receivables and cash 1,400 Total 17,000 On the reporting date a fire within one of Red’s buildings led to an impairment review being carried out. The recoverable amount of the business was determined to be £9.8 million. The fire destroyed some plant and equipment with a carrying value of £1.2 million and there was no option but to scrap it. The other intangibles consist of a licence to operate Red’s plant and equipment. Following the scrapping of some of the plant and equipment a competitor offered to purchase the patent for £1.5 million. The receivables and cash are both stated at their realisable value and do not require impairment. Required: Show how the impairment loss in Red is allocated amongst the assets. Show all your workings. no image based solution thnku
(ii) Oracle Plc owned100% of the equity share capital of Red Plc, a wholly owned subsidiary. The assets at the reporting date of Red Plc were as follows:
£000
Buildings 6,000
Plant and equipment 5,200
Other intangibles (patent) 2,000
Receivables and cash 1,400
Total 17,000
On the reporting date a fire within one of Red’s buildings led to an impairment review being carried out.
The recoverable amount of the business was determined to be £9.8 million. The fire destroyed some plant and equipment with a carrying value of £1.2 million and there was no option but to scrap it. The other intangibles consist of a licence to operate Red’s plant and equipment.
Following the scrapping of some of the plant and equipment a competitor offered to purchase the patent for £1.5 million. The receivables and cash are both stated at their realisable value and do not require impairment.
Required: Show how the impairment loss in Red is allocated amongst the assets. Show all your workings.
no image based solution thnku
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