Impairment – ACCA (SBR) lectures
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Thank you for this excellent lecture which was entertaining yet informative.
As to your query vincent1989, while you may have completed this paper, for others viewing your query, you are correct to say that it has to be allocated on a pro-rata basis BUT here the answer in the video is correct as remember (to look for hints in the question) here we do not have to impair the remaining plant and equipment as we are expressly told that it was worth at least its carrying value – why should we allocate the remaining impairment to it then when it is worth its carrying value. I trust this cleared your point.
See this line from the question: “The remaining plant was worth at least its carrying value.”
Please tell us the friend continued their bus driving career! Terrible if it ended on the first day.
Thank you, it’s amazing!
There was no reply to this previously and I have the same question:
I actually allocated part of the 3.1 to the building (1.86) and part to the remaining P and E (1.24). Was I wrong?
Is the impairment review done on the basis of prudence concept?
Hi, should the allocation of impairment gone to the intangible asset first given it is a specific asset and not goodwill? I know for this question it is not really revel at as you get the same answer anyway but say if the carrying account and impairment of the intangible was higher, then this would mean good will is not fully impaired, it would leave you to give the wrong answer. Please can you confirm ? Thanks
What if the Sub ownership was 80%? Shall we allocate impairment to NCI also?
Hello
can someone tell me why the goodwill is impaired at full amount?
I actually allocated part of the 3.1 to the building (1.86) and part to the remaining P and E (1.24). Was I wrong?
Chris says the P&E has already been impaired (by the 1.2m scrap). So the excess impairment of 3.1m will not be allocated to it anymore. Remember? The impairment hierarchy is specific assets > goodwill > remaining assets on a pro-rata basis. The remaining assets are those assets that have not been specifically impaired at first, and P&E as a whole is considered as one single asset for impairment purposes, so once you have written off the impairment that is attributable to the asset, you’ll not need to write it off further.
I may well be wrong but I don’t feel that is correct. As the question does not specifically state that the only impairment to Plant and Equipment was the specific impairment of 1.2m I think that the remaining 3.1m should be apportioned across the remaining unimpaired Property, Plant and Equipment.
This doesn’t break the hierarchy as you are:
-impairing first specific assets (the amount destroyed)
-impairing goodwill (in full where applicable)
-apportioning the remainder over any remaining assets not already impaired (excl. cash and cash equivalents)
It would be great if we could get a response from Chris as the above is how I was taught to do it in F7 (by open tuition) and it would be great to get some clarity.
Haha you forgot to play around with the video!
Made me laugh a little, which helps while revising for Thursday!
Thanks for the videos!