Question

Gelama Bhd purchased an equipment on the 1 January 2015 for RM12,000,000. The equipment is depreciated on straight lines basis over its five years useful life. Unfortunately, the equipment showed conditions of impairment in June 2017. The fair value less costs to sell on 30 June 2018 was RM 4,000,000 and the value in use was RM5,000,000. 201000.00M b Required: Compute the impairment loss a) (3 marks) b) Show the extract of the statement of financial position as at 31 December 2017. (4 marks) Assume that the equipment has been picking up and the equipment has a recoverable c) amount of RM3,000,000 as at 31 December 2018. Show the extract of the statement of financial position as at 31 December 2018. (9 marks) Prepare the extract of statement of financial position as at 31 December 2019. d) (3 marks) Explain 3 (THREE) indications that show there are reversal of impairment loss. e) (6 marks)

Answer 1

The answer is attached in below picture

If you have any doubts or answer is not in the format as you expected, please send me a comment before rating my answer and i will clarify the doubt

If my answer helped you, please give me a 'Thumbs up'

Thanks

a) Computi impairment loss Cost of equipmeat - RM 12000000 Life of asset it as years Depreuation per year = RM 2,400000 (12000000/5 years) Carrying value on June 2017? Cost2 RM12000000 Less: Depreciation 2015 (RM 240,0.000) 2016 - (Rm @ 900000) 2017 June (Rm 1200000) 2700600x Simo) Carrying value = RM 6,000000

Page Impaiement loss shall be recognised to the extent of difference in Carrying value and value in use or na Fare value whichever is higher ha Carrying value =Rm 6000000- Less: Value in use = Rm 4000.000 Faiq value = RM 5000000 RM 5000000 - Higher Inpaiement loss RM 1000000

position in 6) Extract of financial Dec 31-2017 Casuing value on June 2017 =Rm5000000 vlees! Depreciation for 6 moniti = Rmloogooo cair net balance of equipment = RM 4000000 in 2017 Depreciation carrying value =Rm 5000000 beg ( Remaining lif 2.5 years Depreciation per year = Am 200000 2.5 years Half year = 200000D x = RM 1000000

la Recoverable Cuscount is RM 3000CCO in 31 dec 2018 Carrying amount in Rojê - RM 4000000 Less: Depreciation -RM 2000000 caroling amont in 2018 cod= RM 8000000 The wis of recoverable amount on 2018 end RM 3000000". Hence reversal Pompairment loss shall be needed. The done reversal of impair ment shall be to the extent of difference Carrying amount in 2018 and carrying amount if no impairment made learlier .

Page carrying amount in 2018 - 2000000 lese : Carrying amocent it no implice ment nadle. earlier Cost of equip = RM 12000000 Less: Depreciation fosi 4 years {Rm3600000) 2400000 Reversal of impaissent loss= RPO 400.00 Financial position : Carrying Valele at 2018 - RM 2000000 Add: Reversal of impais ment - RM 400000 Nel position - Am2400000

page d) Financial position in 31st Dec 2019 Carrying amount at beg 2019 = RM240000 less : Depreciation = RM240000 | wet closing balance = NIL y carrying amount - 8400000 life of asset a year Depreciation 2400000 el Indicators of seversal of impairment loss 1 value of equipment is increased significantly during the period & Evidences that the performance of asset is better than expected 3) Significant changes which had & favourable effect took place during the period for the entity