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

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May 22, 2019 at 10:37 pm #516929
joelsm1
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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
P2-D2
Keymaster
- Topics: 4
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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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