1) A cash generating unit has been assessed for impairment and determined an

impairment loss of taka 12,000. The carrying amounts of the assets were as follows:
Buildings
Equipment
Land
Fittings

500,000
300,000
250,000
150,000

Fair value less cost to sell of the assets was as follows:

Buildings
497,000
Equipment
298,000
Land
245,000
Fittings
148500
i)
Give the journal entries to reflect the recognition of impairment loss.
ii)
Suppose remaining economic life of Building, equipment and fittings
were 10, 8 and 5 years respectively with zero salvage value. Company
follows straight line method of deprecation. At the end of next year
there is a reversal of impairment loss of taka 5000. Allocate the
reversal assuming that individual recoverable amount of the unit can
not be determined.
2) Cape town Ltd has been involved in a project to develop an engine that runs on
extracts from sugarcane. In commenced the project in February 2004. Between the
commencement date and reporting date (30 June 2004) there was no indication that
project would be commercially feasible but company already incurred Taka 254,000.
After spending a further Taka 200,000 during July and August, the company had build a
prototype that appeared to be successful. The prototype was demonstrated to a number of
engineering companies during September and a number of these companies expressed
interest in the further development of the Engine. Convinced that it now had a product
that would be able to sell. Company spent a further 70,000 during October for the
problems that engineering firm pointed out. On November 1, company applied for a
patent incurring legal and administrative cost of taka 45,000. The patent had an expected
useful life of 5 years. Company uses straight line method for amortization of intangibles
During December, Company spent an additional Taka 85,000 on engineering and
consultancy cost to develop the project such that the engine was at manufacturing stage.
These resulted in changes in the overall design of the engine and costs of Taka 5000 were
incurred to add minor changes to the patent authority.
On 1 January 2005 Company invited tender for the manufacturing of the engine for
commercial sale.
Prepare the Financial statements extracts regarding the project for the year 2004 and 2005
in accordance with the requirements of IAS 38.