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(v) Magic plc has a retail business which is treated as a separate cash generating unit...

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Accounting

(v) Magic plc has a retail business which is treated as aseparate cash generating unit and which has suffered badly duringthe recession. The carrying amounts of the assets comprising theretail 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 therecoverable amount of the cash generating unit is estimated at MUR1.3m.

Required

i. What will be the carrying amount of the inventory after theimpairment loss in (iii) has been accounted for?

j. What will be the carrying amount of the building after theimpairment loss has been accounted for?

HOW THE $140 IS BEING DISTRIBUTED FOR IMPAIRMENT? WHETHERINVENTORY AND OTHER ASSETS BE IMPAIRED TOO OR ONLY FIXEDASSETS?

Answer & Explanation Solved by verified expert
3.9 Ratings (623 Votes)
Total carrying value of the cash generating unit Carrying value of all assets 900 300 70 130 40 144 m or 1440000 Recoverable amount of the cash generating unit 13 m or 1300000 Impairment loss Carrying amount Recoverable amount 1440000 1300000 140000 or 140 k Now Out of the total impairment loss of 140000 or 140k we will first deduct the    See Answer
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