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June 16 impairment question

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › June 16 impairment question

  • This topic has 1 reply, 2 voices, and was last updated 8 years ago by MikeLittle.
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  • December 5, 2016 at 9:21 pm #354333
    sonyam11
    Member
    • Topics: 4
    • Replies: 68
    • ☆☆

    Patent at cost is 7.5m, acc amort. is 3m

    Study at year end gives present value of net cash flow as 3.25m and an offer received to buy the patent for 3.4m

    what is the impairment loss?

    I got 1.1m impaired (4.5m carrying less recoverable amount 3.4) ie new carrying amount

    but the answer is 0.35 impairment loss with a carrying amount of 3.75m prior to impairment

    why is the carrying amount prior to impairment 3.75m? Is it because it is reviewed at the end of the year rather than at the begining therefore the current year amortisation needs to be taken off before the impairment calc?

    December 6, 2016 at 8:00 am #354417
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    That sounds like it could be the problem

    Of course, you haven’t given me ANY dates so there’s no way that I can be sure

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