Question
Windsor Ltd. is a manufacturer of computer network equipment and has just recently adopted IFRS. The wireless division is a cash-generating unit or asset group
Windsor Ltd. is a manufacturer of computer network equipment and has just recently adopted IFRS. The wireless division is a cash-generating unit or asset group that has the following carrying amounts for its net assets: land, $19,500; buildings, $34,400; and equipment, $8,600. The undiscounted net future cash flows from use and eventual disposal of the wireless division are $76,200, and the present value of these cash flows is $47,900. The land can be sold immediately for $32,700; however, the buildings and equipment are specialized and cannot be used elsewhere and thus have no resale value.
Allocate the impairment loss to the net assets of the wireless division using the cost recovery model under ASPE.
Allocate the impairment loss to the net assets of the wireless division using the rational entity model under IFRS.
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