Chapter 14 - Impairment of assets

You mean "revision questions" not mini-questions I believe For question 2 you are asked to calculate the values of the remaining engine and the goodwill after the impairment loss has been accounted for For question 3 you are asked to calculate the value of the impairment loss that the directors should account for I'm not sure that I understand why you need to ask "which calculations do I need to do exactly" The calculations involved in question 2 need to be exact only to the nearest $1,000 In question 3 the figure (half way down the question) $92,450 needs to be changed to $93,450

I have, in my list of corrections, one for question 3 - I need to change the figure of $92,450 to $93,450 The value in use should be the PRESENT VALUE of the future cash flows - you appear not to have applied discounting! And I believe that your calculation of carrying value is incorrect - I arrive at a figure of $88,300 Re question 2, the second engine carrying value IS $60,000 but that is subject to impairment on a pro-rata basis Re goodwill, is the figure not given in the question?

Show the assets as: Engine Engine Track Brand G/will NCA Total 60 60 90 80 70 150 510 (50) - - (15) (70) - (135) 10 60 90 65 - 150 375 Now impair total down to 350 so another 25 impairment needed We never impair to an amount below recoverable amount, so nothing comes off NCA That means 25 impairment spread pro-rata over the remaining Engine and the Track in the ratio of 60:90 and that means that, of the 25 to be impaired, 10 will go against the second engine and 15 against the track OK now?

You're welcome