4 impairment loss for a cash generating unit

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Unformatted text preview: to record the impairment loss is: Allocation of Loss Net Carrying Amount 22 500 4 500 27 000 227 500 45 500 Impairment loss Goodwill Accumulated depreciation and impairment losses –factory Accumulated amortisation and impairment losses –brand (Allocation of impairment loss) Dr Cr 77 000 50 000 Cr 22 500 Cr 4 500 4 Exercise 13.4 Impairment loss for a cash-generating unit SUNFLOWER LTD Carrying amount of assets: Buildings $240 000 Factory machinery 180 000 Goodwill 15 000 Inventory 80 000 Receivables 35 000 Cash 20 000 570 000 Value in use 535 000 Impairment loss $35 000 Goodwill is written down by $15 000, and the balance of the impairment loss, namely $20,000 is written off across the other relevant assets: Carrying Proportion Allocation Net Carrying Amount of Loss Amount Buildings 240 000 24/42 11 429 228 571 18/42 8 571 171 429 Machinery 180 000 20 000 420 000 The journal entry is: Impairment loss Dr 35 000 Goodwill Cr 15 000 Accumulated depreciation and impairment losses – buildings Cr 11 429 Accumulated depreciation and impairment losses – machinery Cr 8 571 (Allocation of impairment loss) 5 Exercise 13.7 Impairment, two cash-generating units ALOE LTD Angelica Ambrosia Plant $850 825 Patent 240 0 Inventory 54 75 Receivables 75 82 20 Goodwill 25 1 244 1 002 Value in use 1 044 990 (12) Impairment loss (200) In relation to Ambrosia, write goodwill down by $12: Impairment loss Dr 12 Accumulated impairment losses ‐ goodwill Cr 12 In relati...
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