Question

Coffee Company Limited has a trademark with a carrying amount of $83,750, and expected useful life of 15 years. As part of an impairment test on December 31, 2020, due to a change in customer tastes, Coffee Company gathered the following data about the trademark for the purposes of an impairment test: fair value $45,000; fair value less costs to sell $40,000; value in use $95,200; and undiscounted future cash flows $125,000. Assume that Coffee Company is reporting under IFRS. Determine if the trademark is impaired on December 31, 2020.

Answer 1

c11 fx =MAX(C9:010) с A B D E F G H 1 N Impairment loss incurred when carrying amount is greater than Recoverable amount. If impairment loss incurred, carrying amount - recoverable amount. 3 4 5 6 Recoverable amount is the higher of (1) Fair value less cost of disposal (ii) Value in use 7 8 9 10 Fair value less cost of disposal Value in use Recoverable amount Carrying amount of trademark 40000 95200 95200 83750 11 12 13 14 In this case, Carrying amount is less than Recoverable amount. So, in this case there is no impairment 15 16