(b) AB, a public limited company, has decided to comply with IAS 36 Impairment of Assets. The following information is relevant to the impairment review:
(i) Certain items of machiner y appeared to have suffered a permanent diminution in value.
The inventor y produced by the machines was being sold below its cost and this occurrence had affected the value of the productive machiner y. The carr ying value at historical cost of these machines is $290,000 and their net selling price is estimated at $120,000. The anticipated net cash inflows from the machines is now $100,000 per annum for the next three years. A market discount rate of 10% per annum is to be used in any present value computations.
(ii) AB acquired a car taxi business on 1 Januar y 20X1 for $230,000. The values of the assets of the business at that date based on net selling prices were as follows:
$000 Vehicles (12 vehicles) 120 Intangible assets (taxi licence) 30 Trade receivables 10 Cash 50 Trade payables (20)
190 On 1 Februar y 20X1, the taxi company had three of its vehicles stolen. The net selling value of these vehicles was $30,000 and because of non-disclosure of cer tain risks to the insurance company, the vehicles were uninsured. As a result of this event, AB wishes to recognise an impairment loss of $45,000 (inclusive of the loss of the stolen vehicles) due to the decline in the value in use of the cash generating unit, that is the taxi business. On 1 March 20X1 a rival taxi company commenced business in the same area. It is anticipated that the business revenue of AB will be reduced by 25%
leading to a decline in the present value in use of the business, which is calculated at $150,000. The net selling value of the taxi licence has fallen to $25,000 as a result of the rival taxi operator. The net selling values of the other assets have remained the same as at 1 Januar y 20X1 throughout the period.
Required:
Describe how AB should treat the above impairments of assets in its financial statements.
(In par t

(b) (ii) you should show the treatment of the impairment loss at 1 February 20X1 and 1 March 20X1.)