IAS 36 Case study 1 [p 492] - key

Determine Impairment CGU 1 - CGU 2 – Pink

loss Turquoise
CA 1 536 000 1 299 000
RA 1 430 000 1 215 000
Impairment loss 106 000 84 000

Allocate to asset of CGU 1

CA

Pro rata

Allocation of Impairment loss (1)

Adjusted CA

(draft)

FVLCTS

Allocation of Impairment loss (2)

Adjusted CA

C1

C2

C3

C4

C5

C6

C7

C8

C9 = C3+C5+C8

Impairment loss

106 000
write off GV

46 000

Remaining impairment loss (write off other assets):

60 000

Information technology network

284000

284000/1316000

12948

271 052

+2465

268587

Land

450000

450000/1316000

20517

429 483
437000

-7517

437000 (1*)

Plant

393000

393000/1316000

17918

375 082

+3411

371671

Patent

189000

189000/1316000

8617

180 383

+1641

178742

Cash

Inventory

x
X

Receivables

Total

1316000

60000

(1*) Land has FVLCTS of 437000  Impairment loss to Land is: 450000 – 437000= 13000,
(decrease: 7517). Remaining of allocated loss: 7517 (20517-13000) must be allocated to
other assets

CA

Pro rata

Adjust of Impairment
Information technology network

284000

2465

Land

Plant

393000

3411
Patent

189000

1641

Total

866000

7517

The Journal entry:

Dr Impairment loss

106000

Cr GW
46000

Cr Land
13000

Cr IT Network
15413

Cr Acc Dep and Impairment loss – Plant

21329

Cr Acc Dep and Impairment loss – Patent

10258

Allocate to asset of CGU 2

CA

Pro rata

Allocation of Impairment loss (1)

Adjusted CA

(draft)

FVLCTS

Allocation of Impairment loss (2)

Adjusted CA

C1

C2

C3

C4

C5
C6

C7

C8

C9= C3+C5+C8

Impairment loss

84000

write off GV

32000

Remaining impairment loss (write off other assets):

52000

Information technology network

116000
116/982

6143

109857

109857

Land

290000

290/982

15356

274644

274644

Plant

576000

576/982

30501

545499

540000

545499

Patent

No impairment

Total
 982000

52000

The Journal entry:

Dr Impairment loss 84000

Cr GW 32000
Cr Land 15356
Cr IT Network 6143
Cr Acc Dep and Impairment loss – Plant 30501