Question

Impairment of assets (i need PART B answer , PLEASE)

Aero Ltd has determined that its aviation division is a cash–generating unit (CGU). Information as at 30th June 2020 is as follows:

$ Buildings – At cost 600,000

Equipment – At cost 500,000

Inventory 25,000

Land 250,000

Receivables 150,000

Goodwill 90,000

Total 1,615,000

Additional information:

Buildings - Accumulated depreciation as at 30 June 2020: $100,000

Equipment - Accumulated depreciation as at 30 June 2020: $200,000

Aero Ltd calculated the value in use for the division to be $515,000

Required:

a) Calculate the impairment loss as at 30 June 2020

b) Prepare a table as provided below to allocate the above impairment loss

Assets	Carrying Amount	Proportion	loss allocated	Adjusted carrying amount
Total

c) Prepare a general journal (as per template below) to record the above impairment loss for the year ended 30 June 2020. Include a narration

General Journal template:

Date	Details	Debit $	Credit $

Answer 1

Impairment Loss Computation of Carrying amount Building (600,000 - 100,000) Equipment (500,000 - 200,000) Goodwill Land Carrying amount 500,000 300,000 90,000 250,000 1,140,000 515,000 Recoverable amount Higher of Value in use OR Net selling price Not available Therefore, carrying amount 515,000 Impairment Loss = Carrying amount - Recoverable amount = 11,40,000 - 515,000 = 625,000 Assets Carrying Amount Proportion Loss allocated Adjusted carrying amount (A)-(B) = (C) Goodwill Building 245,238 Equipment (A) (B) 90,000 90,000 500,000 (535,000+1050000) X 500,000 254,762 300,000 (535,000-1050000) X 300,000 152,857 250,000 (535,000+1050000) X 250,000 127,381 25,000 150,000 1,315,000 625,000 147,143 Land Inventory Receivable Total 122,619 25,000 150,000 690,000