Question
On 30 June 2021, Clever Ltd conducted an impairment test on the Travel Products Division. The Travel Products Division is treated as a cash-generating unit
On 30 June 2021, Clever Ltd conducted an impairment test on the Travel Products Division. The Travel Products Division is treated as a cash-generating unit for impairment testing purposes.
The assets in the Travel Products Division were at carrying amounts as follows:
|
$ | 30 June 2021 $ | |
| Accounts receivable | 95,000 |
|
| Allowance for doubtful debts | (15,000) | 80,000 |
| Inventory | 105,000 | |
| Building | 200,000 |
|
| Accumulated depreciation - building | (20,000) | 180,000 |
| Patent |
| 75,000 |
| Land | 200,000 | |
| Goodwill | 30,000 |
Land was determined to have a fair value of $170,000 on 30 June 2021.
Clever Ltd determined a recoverable amount for this CGU on 30 June 2021 to be $580,000.
Required:
Prepare the necessary journal entry for impairment loss on the Travel Products Division as at 30 June 2021.(10 marks)
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