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The Limoncello Co. is considering whether according to IAS 36 – ‘Impairment of Assets’, any impairment loss has occurred on its major factory on the Amalfi Coast:
Current carrying value (i.e. cost less accumulated depreciation), € 80m
Value in use, € 120m
Fair value less cost of disposal, € 60m
What is the amount of the impairment loss to be recognised and what is the factory’s carrying value after the recognition of any impairment loss?Your Answer:
Impairment loss: Nil; Carrying value: € 120,000
Correct Answer:Impairment loss: Nil; Carrying value: € 80,000
The recoverable amount is exceeding the carrying value by 40,000. Do we not mention it as 120,000?
it will only be revalued if the company use revalution model for the subsequent years.. by default assume company use cost model( cost-acc.DEP)
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