Question
(v) Magic plc has a retail business which is treated as a separate cash generating unit and which has suffered badly during the recession. The
(v) Magic plc has a retail business which is treated as a separate cash generating unit and which has suffered badly during the recession.
The carrying amounts of the assets comprising the retail business are:
$'000
Building 900
Plant and equipment 300
Inventory 70
Other current assets 130
Goodwill 40
On 31 December 2017, an impairment review has suggested that the recoverable amount of the cash generating unit is estimated at MUR 1.3m.
Required
f. What is the amount of the revaluation surplus that will be recognised in respect of the building in (i)? (3 marks)
g. In respect of the building in (ii), how will the increase in value from MUR 550,000 to MUR 740,000 be accounted for? (2 marks)
h. When an impairment review is carried out, a potentially impaired asset is measured at what amount? (2 marks)
i. What will be the carrying amount of the inventory after the impairment loss in (iii) has been accounted for? (3 marks)
j. What will be the carrying amount of the building after the impairment loss has been accounted for? (5 marks)
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