At 30 September 20X9 Sandown's trial balance showed a brand at cost of $30 million, less accumulated
amortization brought forward at 1 October 20X8 of $9 million. Amortisation is based on a ten-year useful
life. An impairment review on 1 April 20X9 concluded that the brand had a value in use of $12 million and a
remaining useful life of three years. However, on the same date Sandown received an offer to purchase the
brand for $15 million.
What should be the carrying amount of the brand in the statement of financial position of Sandown as at
30 September 20X9?
I dnt understand this question,can u explain me?
Here, we should approach by carrying amount of the fair value minus any amortizsation?
fair value is the value in use, im getting confused ??
Cost- ammor so 30m-9m will give the CV ryt?
Ask the Tutor ACCA FR
Intangible Assets
Recoverable amount is $15m as at April with a 3 year remaining life
6 months later, amortisation has been 1/6 x $15m = $2.5m
So carrying value at 30 September 2009 should be $12.5m
can u tell me steps of approaching such questions?
CV- amortization
Determine the recoverable amount (the higher of value in use compared with net realisable value
Determine carrying value (cost less accumulated depreciation brought forward and less also depreciation since last accounting year end
Compare recoverable amount with (newly calculated) carrying value
Whichever is the lower is the new carrying value to be carried forward
OK?
yeah okay, but less also depreciation since last accounting year end can u explain a bit?
Using your example:
"At 30 September 20X9 Sandown’s trial balance showed a brand at cost of $30 million, less accumulated amortisation brought forward at 1 October 20X8 of $9 million. Amortisation is based on a ten-year useful life. An impairment review on 1 April 20X9 concluded that the brand had a value in use of $12 million and a remaining useful life of three years. However, on the same date Sandown received an offer to purchase the
brand for $15 million."
At 30 September, 20X8 carrying value was $21 million but the revaluation didn't take place until 1 April 20X9
So we need to amortise / depreciate from 1 October, 20X8 until 1 April, 20x9 by a further $1.5 million bringing carrying value down to $19.5 million as at date of revaluation
OK?
nope, dont get it
At 30 September, 20X8 carrying value was $21 million but the revaluation didn’t take place until 1 April 20X9---- this is okay
second part cant understand
Ok, amortise from 1 October, 20X8 until 1 April, 20X9
How much will that be?
(15m/3*) 6/12
My question to u is why do u take 15m , textbuk says there are two options of recognizing Cost and revaluation model, im getting confused?
The issue here is one of impairment. Look at your impairment rules.
Never mind the irrelevance here of Cost or Valuation models!
You've got an intangible asset with a carrying value greater than its recoverable amount.
Calculate recoverable amount and then impair if appropriate
seems okay
That's good
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