aCLASS EXERCISE

QUESTION 1 - Memo

Carrying Fair value less

value costs to sell

Plant & equipment 2 650 000 2 600 000

Motor vehicles 400 000 380 000

Property - factory buildings 1 200 000 1 200 000

Property - Administration
building 1 100 000 1 200 000

Intangible - Goodwill 600 000 Indeterminable

Intangible - Patents 350 000 Indeterminable

Carrying Amount 6 300 000

RA = Greater of 5 300 000

Value in use and 4 000 000

Fair value less costs to sell 5 300 000

Therefore impairment -1000 000

Allocation of impairment
loss

Patents 350000 -330 000 20 000

Goodwill 600000 -600 000 0

Motor vehicles 400000 -20000 380000

Plant & Equip 2650000 -50000 2600000

4000000 -1000 000 3 000 000

QUESTION 2 – MEMO

Carrying Fair value less

value costs to sell Marks

Plant & equipment 1 650 000 1 600 000

Motor vehicles 500 000 480 000

Property - factory buildings 2 000 000 2 000 000

Property - Administration
building 1 500 000 1 600 000

Intangible - Goodwill 800 000 Indeterminable

Intangible - Patents 500 000 Indeterminable

Carrying Amount 6 950 000 1

RA = Greater of 6 000 000

Value in use and 6 000 000 1

Fair value less costs to sell 5 680 000 1

Therefore impairment -950 000 1

Allocation of impairment
loss

Patents 500000 -80 000 420 000 2

Goodwill 800000 -800 000 0 2

Motor vehicles 500000 -20000 480000 2

Plant & Equip 1650000 -50000 1600000 2

3450000 -950 000 2 500 000 2