An entity has a division, Odyssey, which is a separate CGU. The net assets of the division as at 30 June 2020 are as follows:

Cash $ 20 000

Receivables 32 000

Inventory 68 000

Goodwill 20 000

Land 120 000

Machinery 100,000

Accumulated Depn - Machinery (20 000)

Total 340 000

Liabilities (20 000)

Net Assets 320 000

Odyssey's management undertook impairment testing at 30 June 2020 and determined the recoverable amount of the CGU to be $280,000. As a result, Odyssey recognised an impairment loss.

Additional information:

The land has a fair value less costs of disposal of $100,000 at 30 June 2020.

The machinery has a fair value less costs of disposal of $50,000 at 30 June 2020.

1.Determine the amount of the impairment loss at 30 June 2020. Show your workings

2. Show calculations for allocating the impairment loss to the assets in the CGU

3. Prepare the journal entry to record the impairment loss.

4. Why did Odyssey's management undertake formal impairment testing of the CGU?