The directors of Beta Limited believe that the fair value less costs of disposal of the Supply Division and Service Division cash generating units at 31 December 2017 is €751,000 and €738,000, respectively. With respect to the fair value less costs of disposal of the Supply Division cash generating unit, the directors estimate that the patent could be sold separately for €15,000.’

Projections prepared for the company’s bankers indicate the following projected net cash flows:

Cash flows for 2021 include the expected fair values less costs of disposal at that point in respect of each division. The required rate of return for both cash generating units is 10%.
Requirement Calculate the extent of any impairment loss in the Supply Division and Service Division cash generating units and show clearly the necessary journal entries required to reflect any impairment loss in the financial statements of Beta Limited for the year ended 31 December 2017.

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2018 2019 2020 Supply Division 210,000 2021 Service Division 207,000 205,000 240,000 275,000 275,000 260,000 294,000