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Hello Mike
A cash generating unit comprise the following assets:
$’000
Building 700
Plant & equipment 200
Goodwill 90
Current assets 20One of the machines, carried at $40,000, is damaged & will have to be scrapped.
The recoverable amount of the cash-generating unit is estimated at $750,000.What will be the carrying amount of the building when the Impairment loss has been recognised
Ans: $594,000Oh no, I do not understand this question, please help and guide me to the working with explanation. Thanks!
We have to reduce the carrying value from 1,010 down to 750 so reduce by 260
Write off the 40 to leave 160 in PPE and leave a further 220 to reduce
Write off 90 from goodwill leaving a further 130 to reduce
Allocate that 130 proportionately against 700 building and 160 PPE giving us 105.8 against the building and 24.2 against the PPE
Ok?
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