Constructor Limited estimated an impairment loss of €500 against its single cash-generating unit. The company had the following assets:
$\bullet$Headquarters Building €1000;
$\bullet$Construction Plant €600;
$\bullet$Equipment €400.
The net carrying amount of the Equipment after allocation of the impairment loss is:

Question

Constructor Limited estimated an impairment loss of €500 against its single cash-generating unit. The company had the following assets: 
$\bullet$Headquarters Building €1000;
$\bullet$Construction Plant €600;
$\bullet$Equipment €400.
The net carrying amount of the Equipment after allocation of the impairment loss is:

Quizplus · Accepted Answer

The impairment loss of €500 needs to be allocated to the assets in the cash-generating unit based on their relative carrying amounts. 
The total carrying amount of the assets is €2000 (€1000 + €600 + €400). 
Therefore, the Equipment's carrying amount should be reduced by 20% (€400/€2000). 
This means that the net carrying amount of the Equipment after allocation of the impairment loss is €320 (€400 - €80), and therefore the correct answer is C.

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Constructor Limited Estimated an Impairment Loss of €500 Against Its $\bullet$