Shelley Beach Plc has one cash generating unit (CGU)and it has been determined that the CGU has incurred an impairment loss of £80 000 for the year ended 30 June 2014. The carrying amounts of the assets as at 30 June 2014 are as follows: $$\begin{array} { | l | r | }
\hline & \text { Carrying amount } \
\hline \text { Buildings } & 300000 \
\hline \text { Equipment } & 300000 \
\hline \text { Goodwill } & 20000 \
\hline \text { Total } & \underline { 620000 } \
\hline
\end{array}$$ In accordance with IAS 36 Impairment of Assets,what should be the carrying amounts for buildings,equipment and goodwill as at 30 June 2014,respectively?

Question

Shelley Beach Plc has one cash generating unit (CGU)and it has been determined that the CGU has incurred an impairment loss of £80 000 for the year ended 30 June 2014. The carrying amounts of the assets as at 30 June 2014 are as follows: $$\begin{array} { | l | r | } 
\hline & \text { Carrying amount } \
\hline \text { Buildings } & 300000 \
\hline \text { Equipment } & 300000 \
\hline \text { Goodwill } & 20000 \
\hline \text { Total } & \underline { 620000 } \
\hline
\end{array}$$ In accordance with IAS 36 Impairment of Assets,what should be the carrying amounts for buildings,equipment and goodwill as at 30 June 2014,respectively?

Quizplus · Accepted Answer

According to IAS 36, impairment losses are first allocated to goodwill. Thus, the entire £20,000 goodwill is written off. The remaining £60,000 impairment is allocated on a pro-rata basis to buildings and equipment, reducing each by £30,000. Therefore, buildings and equipment are each reduced to £270,000.

Shelley Beach Plc Has One Cash Generating Unit (CGU)and It