1 Question 4 Forest Gum Ltd - Recovery of impairment (12 marks) The two cash-generating units of Forest Gum Ltd are referred to as the Brooke CGU and the Emma CGU. Brooke CGU Emma CGU As at 31 August 2020 $ $ Assets Freehold land 60 000 Less: Accumulated impairment losses (9 000) 51 000 Plant and machinery 325 000 12 000 Less: Accumulated depreciation (112 000) (1 200) Less: Accumulated impairment losses (48 000) 165 000 (2 000) 8 800 Goodwill 30 000 800 Less: Accumulated impairment losses (30 000) (133) 667 Accounts receivable 57 000 1 100 Inventories 32 500 500 Deferred tax assets 17 000 350 322 500 11 417 Forest Gum Ltd depreciates its plant and machinery using straight-line basis of 10% per annum. Hence, the plant and machinery held by the Brooke CGU on 31 August 2020 was depreciated at $32 500 p.a., and the same class of asset of Emma CGU was depreciated at $1 200 p.a. As a result of the impairment testing management re-assessed the factors affecting the depreciation of its non-current asset. The depreciation of the plant and machinery held by the Brooke CGU was increased from $32 500 p.a. to $38 000 p.a. for the year 2020- 2021. By 31 August 2021, the performance in both divisions had improved, and the carrying amounts of the assets of both divisions and their recoverable amounts were as follows: Brooke CGU Emma CGU Carrying amounts of assets $289 000 $10 968 Recoverable amount of CGU 349 000 15 968 Required: Determine how Forest Gum Ltd should account for the results of the assessments of impairment of cash-generating units on 31 August 2021. What is the maximum reversal of impairment losses that could occur? Prepare the necessary journal entries on 31 August 2021 in relation to the impairment assessments. Narrations are not required. [Give reference to applicable AASBs. Round your answers to two decimal places]