Exam 11: Impairment of Assets

Candy Limited expected future cash flows from the use of Equipment as follows: End of Year 1 $4000; End of Year 2 $5000; End of Year 3 $2000.The discount rate was determined as 5%.The value in use of the equipment is:

Jam Pty Ltd has two cash generating units.CGU A had a carrying amount of $700 and value in use of $750.CGU B has a carrying amount of $900 and a value in use of $800.The carrying amount of the head office assets is $400.CGU A & B utilise the head office services equally.The impairment loss for CGU A is:

When assessing the recoverable of assets that have previously been subject to an impairment loss,which of the following indicators assist in providing external evidence that an impairment loss has reversed:

Explain how the fair value of an asset might be determined.

An impairment loss occurs when:

Which of the following assets need to be tested for impairment every year? I intangible assets with indefinite useful lives II intangible assets not yet available for use III intangible assets accounted for under the revaluation method IV goodwill acquired in a business combination

Identify the disclosures for each class of asset in respect to impairment losses.

Explain how an entity can recover the value of an asset.

Where an asset is measured using the cost model,any impairment loss is:

In allocating an impairment loss,an entity shall not reduce the carrying amount of an asset below the highest of:

Under AASB 136 Impairment of Assets,the following assets are subject to impairment testing: I II III IV Inventory Yes Yes No No Assets arising from construction contracts Yes Yes No No Assets arising from employee benefits No Yes No Yes Property,plant and equipment No Yes Yes No

According to AASB 136 Impairment of Assets,the recoverable amount test requires an entity to compare the fair value an asset less costs to sell,with:

Under AASB 136 Impairment of Assets,impairment of an asset,and the accounting treatment using the cost model,are as follows:

Explain how the impairment test protects the carrying amount of goodwill.

At reporting date,the carrying amount of a cash-generating unit was considered to be have been impaired by $900.The unit included the following assets: Land $4000; Plant $3000; Goodwill $500.The amount of impairment allocated to the land is:

At reporting date,the carrying amount of a cash-generating unit was considered to be have been impaired by $800.The unit included the following assets: Land $4000; Plant $3000; Goodwill $1000.The carrying amount of Goodwill after the impairment loss is allocated is:

At reporting date Guilder Limited estimated an impairment loss of $50 000 against its single cash-generating unit.The company had the following assets: Headquarters Building $100 000; Plant $60 000; Equipment $40 000.The net carrying amount of the Plant after allocation of the impairment loss is:

Outline the circumstances under which it would be acceptable to reverse a previously recognised impairment loss.

During 20X7 Sacco Limited,estimated that the carrying amount of goodwill was impaired and wrote it down by $50 000.In 20X8,the company reassessed goodwill was decided that the old acquired goodwill still existed.The appropriate accounting treatment in 20X8 is:

When goodwill is acquired under a business combination it is subject to an impairment test every: