3. Tennis Ltd is testing a significant item of equipment for impairment in view of changes in the game. The equipment is recognized in the statement of financial position at the cost of $4 million less accumulated depreciation of $3 million. Additional information relating to Tennis Ltd and the equipment are provided as follows: The equipment will sell for $2 million under normal market conditions; Future cash flows of $1 million are expected to be derived from Tennis Ltd's continued use of the equipment; The present value of future cash flows of $600,000 is expected to be earned from the equipment, and Selling the equipment costs $50,000. Required In accordance with IAS 36 Impairment of Assets, what is the recoverable amount of the equipment? What is the amount of the impairment write-down, if applicable? 4. Cherry Ltd acquired all the assets and liabilities of Hazel Ltd on 1 January 2020. Hazel Ltd.'s activities were run through three separate businesses, namely Sandstone Unit, the Sapphire Unit and the Silverton Unit. These units are separate cash-generating units. Cherry Ltd allowed unit managers to effectively operate each of the units, but certain central activities were run through the cooperate office. Each unit was allocated a share of the goodwill acquired, as well as a share of the corporate office. At 31 December 2020, the assets allocated to each unit were as follows: Factory Sandstone $ 820 Sapphire $ 750 Silverton $ 460 Accumulated (420) (380) (340) depreciation Land 200* 300** 150* Equipment 300 410 560 Accumulated (60) (320) (310) depreciation Inventory 120 80 100* Goodwill 40 50 30 Corporate property 200 150 120 *these assets have a carrying amount less than fair valve less costs to sell. **this asset has a fair value less costs to sell of $293. Cherry Ltd determined the value in use of each of the business units on 31 December 2020. Sandstone Sapphire Silverton $ 1170 900 800 Required: Using knowledge of IAS 36: Determine the allocation of impairment loss for Cherry Ltd, on 31 December 2020. The End. 3. Tennis Ltd is testing a significant item of equipment for impairment in view of changes in the game. The equipment is recognized in the statement of financial position at the cost of $4 million less accumulated depreciation of $3 million. Additional information relating to Tennis Ltd and the equipment are provided as follows: The equipment will sell for $2 million under normal market conditions; Future cash flows of $1 million are expected to be derived from Tennis Ltd's continued use of the equipment; The present value of future cash flows of $600,000 is expected to be earned from the equipment, and Selling the equipment costs $50,000. Required In accordance with IAS 36 Impairment of Assets, what is the recoverable amount of the equipment? What is the amount of the impairment write-down, if applicable? 4. Cherry Ltd acquired all the assets and liabilities of Hazel Ltd on 1 January 2020. Hazel Ltd.'s activities were run through three separate businesses, namely Sandstone Unit, the Sapphire Unit and the Silverton Unit. These units are separate cash-generating units. Cherry Ltd allowed unit managers to effectively operate each of the units, but certain central activities were run through the cooperate office. Each unit was allocated a share of the goodwill acquired, as well as a share of the corporate office. At 31 December 2020, the assets allocated to each unit were as follows: Factory Sandstone $ 820 Sapphire $ 750 Silverton $ 460 Accumulated (420) (380) (340) depreciation Land 200* 300** 150* Equipment 300 410 560 Accumulated (60) (320) (310) depreciation Inventory 120 80 100* Goodwill 40 50 30 Corporate property 200 150 120 *these assets have a carrying amount less than fair valve less costs to sell. **this asset has a fair value less costs to sell of $293. Cherry Ltd determined the value in use of each of the business units on 31 December 2020. Sandstone Sapphire Silverton $ 1170 900 800 Required: Using knowledge of IAS 36: Determine the allocation of impairment loss for Cherry Ltd, on 31 December 2020. The End