Hello Sir,
In your lecture for impairment of CGU you said not to allocate to PPE after deducting scrapped item but in the following question they did allocate some impairment after deducting the damaged machine,
so how is that ,
Thanks,
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A cash-generating unit comprises the following assets:
$'000
Building 700
Plant and equipment 200
Goodwill 90
Current assets 20
1,010
One of the machines, carried at $40,000, is damaged and 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 after the impairment loss has been recognised?
(to the nearest $'000)
A $597,000
B $577,000
C $594,000
D $548,000
5y ago#1Hi,
The two questions were different in that the one in the lecture notes had looked at all of the assets on that class of asset already, hence we did not need to allocate any more of the impairment.
In this question, they have only looked at $40,000 worth of machinery in the plant & equipment category, they have not looked at any of the remaining assets within the category. Therefore any remaining impairment will need to be allocated to the assets.
Thanks
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