End of Chapter Exercise 7.13

Bunsen Ltd acquired all the assets and liabilities of Jones Ltd on 1 January 2017. Jones Ltd's activities were run through three separate businesses, namely the Alpha Unit, the Beta Unit and the Gamma Unit. These units are separate CGUs. Bunsen Ltd allowed unit managers to effectively operate each of the units, but certain central activities were run through the corporate office. Each unit was allocated a share of the goodwill acquired, as well as a share of the corporate office.

At 31 December 2017, the assets allocated to each unit were as follows:

Alpha $	Beta $	Gamma $
Factory	820	750	460
Accumulated depreciation	(420	)	(380	)	(340	)
Land	200	300	150
Equipment	300	410	560
Accumulated depreciation	(60	)	(320	)	(310	)
Inventories	120	80	100
Goodwill	40	50	30
Corporate property	200	150	120

Bunsen Ltd determined the recoverable amount of each of the business units at 31 December 2017:

Alpha	$1,170
Beta	900
Gamma	800

The fair value less cost of disposal of land is $293 for Beta Unit.

Determine how Bunsen Ltd should allocate any impairment loss at 31 December 2017.(Enter debit entries first, followed by credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answersand intermediate calculationsto 0 decimal places, e.g. 5,275.)

Account and explanation

Debit

Credit

LandAccumulated depreciation and impairment losses ? corporate propertyAccumulated depreciation and impairment losses ? equipmentImpairment lossAccumulated impairment losses ? goodwillAccumulated depreciation and impairment losses ? factory

Impairment lossAccumulated depreciation and impairment losses ? equipmentAccumulated impairment losses ? goodwillAccumulated depreciation and impairment losses ? corporate propertyAccumulated depreciation and impairment losses ? factoryLand

Accumulated depreciation and impairment losses ? factoryAccumulated impairment losses ? goodwillLandAccumulated depreciation and impairment losses ? equipmentAccumulated depreciation and impairment losses ? corporate propertyImpairment loss

Accumulated impairment losses ? goodwillAccumulated depreciation and impairment losses ? corporate propertyAccumulated depreciation and impairment losses ? factoryImpairment lossLandAccumulated depreciation and impairment losses ? equipment

Accumulated depreciation and impairment losses ? factoryImpairment lossLandAccumulated depreciation and impairment losses ? equipmentAccumulated depreciation and impairment losses ? corporate propertyAccumulated impairment losses ? goodwill

Accumulated depreciation and impairment losses ? corporate propertyLandAccumulated depreciation and impairment losses ? equipmentAccumulated depreciation and impairment losses ? factoryImpairment lossAccumulated impairment losses ? goodwill

(Allocation of impairment loss)