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A cash-generating unit comprises the following assets:
Plant and equipment
One of the machines, carried at $40,000, is damaged and will have to be scrapped. The recoverable amount
of the cash-generating unit is estimated at $750,000.
What will be the carrying amount of the building after the impairment loss has been recognised?
(to the nearest $’000)
>>>>> Specific impairment is 40000. Remaining impairment is 220 so we allocate 90 to the Good will which leaves us with 130 impairment that needs to be allocated on a pro rata basis on the remaining assets. My question is why do we not consider the current assets when allocating them on a pro-rata basis? The answer only allocates it to the buildings and remaining carrying value of Plant.
The current assets will be inventory, receivables and cash. Cash will not be impaired and we have to assume that the other balances (inventory and receivables) are held at the correct amounts based upon their individual accounting standards.