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3b(i)
They mention the answer that the group profit before tax has fallen by 33.3% indicating that a significant impairment loss amounting to more than the 50,000 calculated by the finance director may need to be recognized.My question is why the assumption was taken that as the group profit fallen this indicates more impairment need to be recognized, what i am thinking is that it could fall for other reasons as well ( other operating expenses) ?
Thank you in advane
Oh i got it know , they are making an assumption, ( may need to recognize more impairment)
Yes indeed – that was what I was going to point out – the important word is “may”. All the answer is doing is finding some reason why you should be sceptical that when $10m of the $90m assets in SoFP is goodwill that just maybe impairment might be more than $50,000.
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