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A head office building with a carrying amount of $140m is estimated to have a recoverable amount of
$90m due to falling property values in the area. An impairment loss of $50m is recognised.
After three years, property prices in the area have risen, and the recoverable amount of the building
increases to $120m. The carrying amount of the building had the impairment not occurred would have
been $110m.
Required
Calculate the reversal of the impairment loss.I have a question about that if RA has increased after the year we can reverse impairment with the amount which was allocated 50m.. and how we know that there is impairement in 110m. which is not given .only written that impairment not occurred.If it isnot occured why didnt we add 10m(difference between RA and CA 120-110) to CA and showing CA in the financial statement with the value of 120m?
entry for this transaction would be or not??
Dr Loss on impairment 50m
Cr Accumulated Impairment Loss 50mthen we reversed
Dr Accumulated impairment Loss 10m
Cr Gain on Reversal 10mIt has been impaired down to $90 (Dr Profit or Loss 50, Cr Asset 50)
Part of that impairment is now being reversed
We can only un-impair back to the level that the asset would have been had we not impaired
The question tells us that that figure would have been $110
Therefore we shall un-impair by $20 (Dr Asset 20, Cr Profit or Loss 20)
(Where did you get your 10 from)
OK?
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