Question

Q.No.1(a): An asset is considered to be impaired if its carrying value is more than its recoverable amount. In order to assess whether an asset has impaired, IAS 36 describes a number of indications based on internal and external sources of information. What are these indications?                                                                                                           (Marks 03)

Q. No.1(b): A cash generating unit consists of the following assets at their carrying values as at December 31,2019:                                                                                               (Marks 05)

                                                                        Rs. ‘000’

Building                                                          Rs.90,000

Plant                                                                Rs.40,000

Goodwill                                                         Rs.30,000

Current assets                                                  Rs.60,000

Total                                                              Rs.220,000

An impairment review was undertaking on December 31,2019 and it was found that the estimated recoverable amount of the cash generating unit was Rs. 160 million.

Required:

How the amount of impairment loss of the cash generating unit will be allocated to different assets as per IAS 36- Impairment of Assets?

Subject Is Financial Reporting 2 Answer is require on immegiate basis

Answer 1

			Amount $
	Plant	a	$                 40,000.00
	Building	d	$                 90,000.00
	Goodwill	i	$                 30,000.00
	Current asset	j	$                 60,000.00
	Total Carrying Value	l=Total-c-g	$             2,20,000.00
	Recoverable amount	m	$             1,60,000.00
	Impairment loss	n=g-m	$                 60,000.00
	Allocated to
1	Goodwill		$                 30,000.00
	Balance impairment loss		$                 30,000.00
	Allocated to all other asset except goodwill
	Remaining carrying value		$             1,90,000.00
			(220,000-30,000)
2	Plant		$                         6,316
3	Building		$                       14,211
4	Current asset		$                         9,474
	Journal Entry to record impairment loss(Combined)
	Accounts & Explaination	Debit $	Credit $
	Impairmnt loss expense	$    60,000.00
	Plant		$                         6,316
	Building		$                       14,211
	Goodwill		$                       30,000
	Current asset		$                         9,474
	(To record impairment loss)

	Indications of impairment [IAS 36.]
1	market value declines.
2	negative changes in technology, markets, economy, or laws.
3	increases in market interest rates.
4	net assets of the company higher than market capitalisation.