Palm Beach Ltd has a cash generating unit (CGU)and has been assessed for impairment and it has determined an impairment loss of $100 000. The following information relates to the assets as at 30 June 2012. $$\begin{array} { | l | r | r | }
\hline & \text { Carrying amount } & \text { Recoverable amount } \
\hline \text { Buildings } & 800000 & 900000 \
\hline \text { Equipment } & 200000 & 150000 \
\hline \text { Goodwill } & 50000 & \
\hline
\end{array}$$ In accordance with AASB 136 Impairment of Assets what should be the carrying amount of buildings as at 30 June 2012?

Question

Palm Beach Ltd has a cash generating unit (CGU)and has been assessed for impairment and it has determined an impairment loss of $100 000. The following information relates to the assets as at 30 June 2012. $$\begin{array} { | l | r | r | } 
\hline & \text { Carrying amount } & \text { Recoverable amount } \
\hline \text { Buildings } & 800000 & 900000 \
\hline \text { Equipment } & 200000 & 150000 \
\hline \text { Goodwill } & 50000 & \
\hline
\end{array}$$ In accordance with AASB 136 Impairment of Assets what should be the carrying amount of buildings as at 30 June 2012?

Quizplus · Accepted Answer

According to AASB 136, impairment losses are first allocated to reduce the carrying amount of any goodwill allocated to the cash-generating unit (CGU) and then to the other assets of the unit on a pro-rata basis based on the carrying amount of each asset in the unit. Since the goodwill amount is $50,000, the impairment loss of $100,000 first fully writes off the goodwill ($50,000), leaving $50,000 to be allocated to other assets. However, the recoverable amount of buildings is higher than their carrying amount, indicating no impairment is needed for buildings. Thus, the carrying amount of buildings remains unchanged at $800,000.

Palm Beach Ltd Has a Cash Generating Unit (CGU)and Has