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Hi Chris,
Doubt regarding solution provided in Chapter 7 practice question 2
CGU: Total assets- 510
Recoverable amount- 350
Total impairment- 160(50) is impaired to engine 1
(70) goodwill is full impaired
(15) is impaired to brand
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Remaining 25 (160-50-70-15)In the solution provided: remaining 25 is allocated between engine 2 and trackers and stations in pro rata basis (60:90)
My doubt is, why that 25 is not allocated among net current assets, engine 1, trackers and stations in pro rata basis (60:90:150)
Why impairment balance is not allocated to net current assets?
Thanks in advance
Hi,
This is because we’ve already been given the information about the engines, where only one has been impaired. As there is no further information given about the other engine then we take it that it is not impaired, The remaining impairment is not therefore allocated to it.
Thanks
Thanks for your reply Tutor,
But why net current asset is not included for allocation of remaining 25. Allocation is made only between engine 2 and trackers at the ratio (60: 90)
Why is it not allocated among net current asset, engine 2 and trackers in the ratio (150: 60: 90)
Thanks
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