Question
Hazel Ltd is engaged in the importation of foods and which is processed further in its factory. On 03 September 2020, it was reported on
Hazel Ltd is engaged in the importation of foods and which is processed further in its factory. On 03 September 2020, it was reported on the social media and newspaper that many customers have been admitted to hospital after consuming the foods sold by Hazel Ltd. The news were spread across the country and Hazel Ltd found that the sales were decreased significantly. An impairment test conducted on 30 September 2020, revealed the following with respect to a cash generating unit (CGU):
Carrying value before impairment | Fair value less cost to sell after impairment | |
$ million | $ million | |
Machinery | 50 | 35 |
Equipment | 80 | Not measurable |
License | 35 | 12 |
nvestment property | 60 | Not measurable |
Goodwill | 20 | Not measurable |
Inventory | 25 | 25 |
It was estimated that the value in use and fair value less cost to sell of the CGU at 30 September 2020 were $ 100 million and $ 150 million respectively
REQUIRED
Compute the amount of impairment and allocate it to individual assets. Also calculate the revised net asset value for the year ended 30 September 2020. [11 Marks]
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started