CGU

From Kaplan Exam kit!!

A division of a company has the following balances in its FS :
Goodwill = $700,000
Plant = $950,000
Building = $2,300,000
Intangibles = $800,000
Other net asset = $430,000

Following a period of losses, the recoverable amount of the division is deemed to be $4 million. A recent valuation of the building showed that the building has a market value of $2.5 million. The other net assets are at their recoverable amount. The company uses the cost model for valuing building , plant and equipment.

To the nearest thousand, what is the balance on plant following the impairment review ?

Solution :

Total cv = $5,180,000
Recoverable amount = $4 million
Impairment loss = $1,180,000

Goodwill eliminated = 1,180,000 – 700,000 = $480,000

Pro rate plant and intangibles to allocate impairment to plant only since other net asset are at their recoverable figure .

950,000+800,000 = $1750,000

Plant = 950,000/1,750,000 = 261,000
Carrying amount = 950,000 – 261,000 = $689,000

My question, why was the building excluded from the total figure when pro rated is used in allocating the impairment loss across plant , building and intangible assets ?

That is, 950,000 + 800,000 + 2,300,000 = $4,050,000. Then we can apply pro rate to calculate each balances

I was thinking it was part of the Cash generating unit which was added together to get $5,180,000.