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Dear Mike,
Just a clarification on some doubts that I have regarding below question.
At 30 September 20×9 Sadown’s trial balance showed a brand at cost of $30 million, lessa accumulated amortisation brought forward at 1 October 20×8 of $9M. Amortisation is based on a ten-year useful life.
An impairment review on 1 April 20×9 concluded that the brand had a value in use of $12M and a remaining useful life of three years. However, on the same date Sandown received an offer to purchase the bran for 15M.What would be the carrying amount of the brand in the statement of financial position of Sandown as the 30 September 20×9?
Solution:
Recoverable amount – fair value less cost of disposal 15M
Less depreciation 1.4.20×9 -30.09.20×9 (15/3*6/12) (2.5)12.5
Why has only 6 months of depreciation been accounted?
What about the depreciation from the 01.10.20×9 to 31.03.20×9?
Thanks in advance for your response
Best Regards
Gabriella
“Why has only 6 months of depreciation been accounted?”
Because the value (recoverable amount) as at 1 April, 2009 was $15 million
“What about the depreciation from the 01.10.20×9 to 31.03.20×9?”
I presume that “01.10.20×9” should be “01.10.20×8”
What about it? You’re told what the fair value / recoverable amount is as at 1 April, 2009
This is not the same as what the carrying value as at that date would be ($19.5 million)
Dear Mike,
I presume that “01.10.20×9” should be “01.10.20×8” Yes
This is not the same as what the carrying value as at that date would be ($19.5 million)
Sorry I did not understand fully what your statement above mean?
Thanks
Gabriella
As at 1 October 2008 the carrying value was $21 million (per question $30 million – $9 million)
Amortisation of the brand for the 6 months to date of revaluation / assessment (30 September, 2008) for impairment is 6/12 x $3 million = $1.5 million so carrying value as at date of re-assessment is $19.5 million ($21 million – $1.5 million)
Is that clearer?
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