Conditions of impairment have been identified. The company has established that thereare two CGU's: the merchandising division and the construction division. The assets ofthe merchandising division include Building 1 and Equipment 1 and 3. The assets of theconstruction division include Building 2 and the remaining equipment. Information oneach of these assets is provided below:Carrying Value at Dec 31, 20x5$4,700,0003,236,752433,500223,125595,000306,000585,706555,000AssetResidual ValueBuilding 1Building 2Equipment 1Equipment 3Equipment 4Equipment 5Equipment 6Equipment 7$500,000200,000100,00040,000100,00030,000The following additional data has been provided.MerchandisingConstructionDivisionDivisionFair value of assetsEstimated costs to sell5,200,000500,000$5,000,000450,000Future cash flow budget$500,000500,000500,000500,000400,000$250,000350,000450,000500,000600,00020х620х720x820x9Beg of 20x10 – end of 20x24 The relevant discount rate is 6%.Required – For each of the two CGUS, prepare the impairment journal entry (if any) atDecember 31, 20x5. Assume the company follows IFRS.

Impairment is the reduction in fair value of assets in market below the carrying value of assets in…

Answered: Required – For each of the two CGUS,…

Required – For each of the two CGUS, prepare the impairment journal entry (if any) at December 31, 20x5. Assume the company follows IFRS.

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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