Required a. Calculate the revised carrying amount of the assets for this CGU for the year ending 31 December 2021 taking into account any impairment loss incurred. b. Which are the two models of valuation of a PPE in accordance to IAS 16? Briefly describe them.
Required a. Calculate the revised carrying amount of the assets for this CGU for the year ending 31 December 2021 taking into account any impairment loss incurred. b. Which are the two models of valuation of a PPE in accordance to IAS 16? Briefly describe them.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Question 6
Billington plc has the following division as at 31 December
2021:
Carrying Value
(£'000)
Non-current assets
- Land
2,000
- Buildings
1,200
- Goodwill
600
Inventory
500
Net monetary assets
330
Total
4,630
None of the monetary assets or inventory has a recoverable
amount less than their current carrying values at the year end.
An impairment review reveals that the net selling price of the
entire division is £2,800,000 at 31 December 2021.
In terms of value in use, the division has the following expected
cash flows in the next 4 years:
£'000
2022 1,300
2023 1,000
2024 900
2025 800
The cost of capital for the company is 10% and the division is
not expected to generate any cash flow beyond 2025.
This division is treated as a separate cash generating unit (CGU)
for purposes of impairment review.
Required
a. Calculate the revised carrying amount of the assets for this
CGU for the year ending 31 December 2021 taking into account
any impairment loss incurred.
b. Which are the two models of valuation of a PPE in
accordance to IAS 16? Briefly describe them.
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