Bovine Ltd. has the following assets in a CGU: Carrying Value (thousands) Equipment .................................................... $ 600 Building

Question:

Bovine Ltd. has the following assets in a CGU:

                                                    Carrying Value (thousands)

Equipment ....................................................  $ 600

Building  .........................................................    650

Land  ...............................................................   700

Goodwill  .........................................................   550
                                                                          $2,500

The recoverable amount has been determined to be $1,500. The separate fair value less costs to sell for land is $600; no other assets could be separately valued.


Required:

1. Allocate the impairment loss to individual assets and calculate the net book value of each asset after the impairment.
2. Assume that the recoverable amount recovered to $1,800 in the subsequent year. Allocate the impairment reversal to individual assets and calculate the net book value of each asset after the impairment. The separate fair value less costs to sell for land remains at $600. There is no concern with a ceiling value when assigning the recovery to building or equipment.

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Related Book For  book-img-for-question

Intermediate Accounting Volume 1

ISBN: 9781260306743

7th Edition

Authors: Thomas H. Beechy, Joan E. Conrod, Elizabeth Farrell, Ingrid McLeod Dick

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