Required – For each of the two CGUS, prepare the impairment journal entry (if any) at December 31, 20x5. Assume the company follows IFRS.
Required – For each of the two CGUS, prepare the impairment journal entry (if any) at December 31, 20x5. Assume the company follows IFRS.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question

Transcribed Image Text:Conditions of impairment have been identified. The company has established that there
are two CGU's: the merchandising division and the construction division. The assets of
the merchandising division include Building 1 and Equipment 1 and 3. The assets of the
construction division include Building 2 and the remaining equipment. Information on
each of these assets is provided below:
Carrying Value at Dec 31, 20x5
$4,700,000
3,236,752
433,500
223,125
595,000
306,000
585,706
555,000
Asset
Residual Value
Building 1
Building 2
Equipment 1
Equipment 3
Equipment 4
Equipment 5
Equipment 6
Equipment 7
$500,000
200,000
100,000
40,000
100,000
30,000
The following additional data has been provided.
Merchandising
Construction
Division
Division
Fair value of assets
Estimated costs to sell
5,200,000
500,000
$5,000,000
450,000
Future cash flow budget
$500,000
500,000
500,000
500,000
400,000
$250,000
350,000
450,000
500,000
600,000
20х6
20х7
20x8
20x9
Beg of 20x10 – end of 20x24

Transcribed Image Text:The relevant discount rate is 6%.
Required – For each of the two CGUS, prepare the impairment journal entry (if any) at
December 31, 20x5. Assume the company follows IFRS.
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