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Impairment Loss

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Impairment Loss

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  • July 20, 2016 at 6:40 pm #328066
    vaishna006
    Member
    • Topics: 6
    • Replies: 3
    • ☆

    A Cash Generating unit comprises the following:

    $M
    Building 30
    Plant and Equipment 6
    Goodwill 10
    Current Assets 20
    —-
    66
    ===

    Impairment review has estimated the recoverable amount of CGU to $50 M.

    I’m having troubles in calculating the pro-rata part.

    I want to know this simple question first before going for difficult ones.

    July 20, 2016 at 7:09 pm #328080
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23309
    • ☆☆☆☆☆

    After impairing goodwill down to zero, there is a further 6 more to impair and that is spread pro-rata amidst the building and the PPE

    Building takes 30/36 x 6 = 5 and
    PPE takes 6/36 x 6 = 1

    So the assets after impairment are:

    Building 25
    PPE 5
    CA 20

    Total 50

    OK now?

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