Tinto Ltd has a division with the following assets:
£’000
Assets
Goodwill 100
Patents 200
Machines 300
Computers 500
Buildings 1,500
Land 800
Total=3,400
This division is operated as a CGU. There was an explosion in the division’s
factory before the end of the financial year. Half of the machines were
destroyed and but the other half, however, can be sold for at least their book
value.
An impairment review also reveals that the net selling price of the entire
division is £2,300,000 and its value in use is £2,750,000. The land has a net
selling price of £900,000 at the year end. Patents have no resale value and
are considered worthless after the explosion.
Requirement:
a. Calculate the revised carrying amount of the assets for this CGU taking into
account the impairment loss incurred during the year.
(10 marks)
b. Indicate and explain what internal and external factors a company would
normally consider when carrying out an impairment review?
(5 marks)
Total 15 marks
I am stuck in question A I started it but lost with how to allocate the impairment loss which is 650000.