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- March 29, 2019 at 10:43 am #510783
bpp question
A cash-generating unit comprises the following assets:
Building = 700000
Plant and equipment= 200000
Goodwill = 90000
Current assets = 20000Total = 1,010,000
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 when the impairment loss has been recognised?
(to the nearest $’000)
$597,000
$577,000
$594,000
$548,000now as in ur notes….give impairment first to specific asset then goodwill then remaining asset on pro-rate basis
so impairment loss = 1010000-750000 = 260000given 40000 to plant
then goodwill 90000
so remaining = 130000 should be given to building
building carry value should be = 700000-130000 = 570000but answer is 594000, bpp is distributing the remaining 130000 impairment to plant and building on prorata basis. why so even plant has been charged for its specific impairment share…?
Is it because the question says one of the machines of 40,000 is damaged. So indicating still the remaining impairment to be apportion to them also along with building.
March 30, 2019 at 10:29 am #510855Hi,
In this question there isn’t anything to say that the other machines are not impaired and so they have allocated the impairment to them as well as against the building.
Thanks
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