Question

GCA Ltd reported the following information in its statement of financial position at 30 June 2020:

                   Plant                                                                    $650,000

                   Accumulated depreciation – plant                  (150,000)

                   Intangible assets                                               300,000

                   Accumulated amortisation                               (100,000)

                   Land                                                                    300,000

                   Total non-current assets                                  1,000,000

                   Cash                                                                    50,000

                   Inventory                                                             180,000

                   Total current assets                                          230,000

                   Total assets                                                       $1,230,000

                   Liabilities                                                             150,000

                   Net assets                                                          $1,080,000

At 30 June 2020, GCA Ltd analysed the internal and external sources of information that would indicate deterioration in the worth of its assets. It determined that there were indications of impairment. GCA Ltd calculated the recoverable amount of the assets to be $980,000.

Provide the journal entry for any impairment loss at 30 June 2020. Show all calculations.

Answer 1

Carrying amount of assets	1,230,000
Recoverable amount	980,000
Impairment loss	250,000
	Carrying Amount	Proportion	Allocation of Loss	Net Carrying Amount
Plant	500,000	5/10	125,000	375,000
Intangibles	200,000	2/10	50,000	150,000
Land	300,000	3/10	75,000	225,000
	1,000,000		250,000
Description	Debit	Credit
Impairment loss	250,000
Accumulated depreciation and impairment losses –plant		125,000
Accumulated amortization and impairment losses –intangibles		50,000
Land		75,000
(Allocation of impairment loss)