Question

make it clear using table or excel

Consider the following information that relates to five different items of plant and equipment at the reporting date:

Asset	Carrying amount $	Fair value $	Costs of disposal $	Value in use $
A	100 000	105 000	3 000	110 000
B	50 000	45 000	1 000	48 000
C	80 000	85 000	2 000	82 000
D	200 000	190 000	5 000	220 000
E	120 000	120 000	3 000	115 000

Required

1. Calculate the recoverable amount for each of the five plant and equipment assets.
2. Assuming plant and equipment is carried under the cost model, determine the amount of any impairment adjustment necessary for each of the five assets.

Answer 1

Impairment of assets are done when the carrying amount of assets are more than its recoverable amount.

Recoverable amount is the higher of an assets' net selling price and its value in use.

Net Selling price is the difference between Fair value and Costs of disposal.

a)

Assets	Carrying Amount($)	Fair Value ($)	Costs of disposal($)	Value in Use($)	Net Selling Price($) [Fair Value- Cost of disposal]	Recoverable Amount($) [Higher of Value in use or Net selling price]
A	100000	105000	3000	110000	102000	110000
B	50000	45000	1000	48000	44000	48000
C	80000	85000	2000	82000	83000	83000
D	200000	190000	5000	220000	185000	220000
E	120000	120000	3000	115000	117000	117000

b) In the given case Impaiment is required if carrying amount is more than the recoverable amount. This scenario exists for Assets B & E.

Assets	Carrying Amount($)	Fair Value ($)	Costs of disposal($)	Value in Use($)	Net Selling Price($) [Fair Value- Cost of disposal]	Recoverable Amount($) [Higher of Value in use or Net selling price]	Impairment
A	100000	105000	3000	110000	102000	110000	0
B	50000	45000	1000	48000	44000	48000	2000
C	80000	85000	2000	82000	83000	83000	0
D	200000	190000	5000	220000	185000	220000	0
E	120000	120000	3000	115000	117000	117000	3000