Impairment Pro-rata

I presume that this is an impairment question!

We have carrying values of $300,000 and a recoverable amount of $200,000 so we need to impair by $100,000

First, reduce any individual asset that is identified as being impaired – in your post, this doesn’t apply

Next, eliminate the intangible asset of goodwill – in full if the impairment exceeds the goodwill figure and in your example, the impairment $100,000 is greater than the goodwill balance $50,000 so that leaves us with just $50,000 more to impair

NCA are always carried at the lower of cost and net realisable value (recoverable amount) so we can’t impair those

That leaves us with $50,000 to impair against PPE $200,000 and patent $20,000 in the ratio 200:20 or 10:1

So, of that $50,000, 10/11 x $50,000 ($45,454) is allocated against the PPE and 1/11 x $50,000 ($5,455) is allocated against the patent

OK?