Elimax plc has recently been acquired by a new owner, who has installed a new management team. Elimax has faced difficult trading activities in the past few years and the new finance director has doubts about the value of some of the assets in the statement of financial position. Elimax consists of two divi- sions, which currently employ the following net assets:

In addition the company has central tangible non-current assets of £4,500,000. These are estimated to be equally related to the two divisions. None of the assets has been revalued in the past.
The intangible asset of the estate agency division relates to the cost of a trade mark acquired from a competitor several years ago. It is estimated that the trade mark has a net selling price of £380,000.
Both divisions have suffered from under-investment in recent years.
The net fair value of the estate agency division is estimated to be £13,500,000, and £12,000,000 for the public relations division.
Budgeted pre-tax cash flows for the next four years are as follows:

The required rate of return is 14% for both divisions. The significant increases in cash flow will arise from the impact of the new management team. There will be no significant cash flows from the assets employed in each division after Year 4.
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(a) Calculate the extent of any impairment in either division.

(b) Prepare a schedule of adjustments to the net assets of each division.
Discount factors at 14% are:

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Non-current assets Tangible Intangible Goodwill Estate agency division 000 16,750 400 Public relations division 000 15,900 620 17,150 16,520