A cash generating unit has the following values; Goodwill = €30,Property =€60 & Plant = €90.An impairment loss of €45 is suffered.After allocation of the impairment loss what is the carrying value of the property?

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Quizplus · Accepted Answer

The impairment loss is first allocated to reduce the carrying amount of any goodwill allocated to the cash-generating unit. The remaining impairment loss is then allocated on a pro-rata basis to the other assets of the unit. Here, the goodwill of €30 is first reduced to zero by the impairment loss, leaving €15 (€45 - €30) to be allocated to the Property and Plant. The total before impairment for Property and Plant is €150 (€60 + €90). The Property's share of the remaining impairment is (€60/€150) * €15 = €6. Therefore, the carrying value of the Property after impairment is €60 - €6 = €54.

A Cash Generating Unit Has the Following Values; Goodwill =