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CGU Question(Similar scenario to lecture video, but contradicts with BPP answer)

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › CGU Question(Similar scenario to lecture video, but contradicts with BPP answer)

  • This topic has 1 reply, 2 voices, and was last updated 6 years ago by AvatarP2-D2.
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    Posts
  • May 22, 2019 at 10:37 pm #516929
    Avatarjoelsm1
    Participant
    • Topics: 5
    • Replies: 10
    • ☆

    A cash generating unit comprises the following assets:

    $ 000
    Building 700
    Plant and equipment 200
    Goodwill 90
    Current assets 20
    ____
    1010
    One of the machine carried at $40000 is damaged and will have to be scrapped. The recoverable amount of the cash generating unit is estimated at $ 750000.

    What will be the carrying amount of the building when the impairement loss has been recognized?
    A)$597000
    B)$577000
    C)$594000
    D)$548000

    In your lecture video, I understand your reasoning for not further impairing P+E after removing the destroyed P+E. But in this question, BPP also includes the remaining P+E in the pro-rata impairment calculation along with Building, giving answer C. While following your method I got $570000.

    Can you please assist? Not sure if I may have gotten confused somewhere along.
    Thanks

    May 24, 2019 at 7:45 pm #517210
    AvatarP2-D2
    Keymaster
    • Topics: 4
    • Replies: 7232
    • ☆☆☆☆☆

    Hi,

    If there is nothing specific in the question then the impairment is allocated against the category that has suffered the impairment. The example in the notes is more specific given the assets involved.

    Thanks

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