Impairment Quiz Questions Essay

1.When should an entity admit an disablement essay? (2 Marks)Assets that atomic itemise 18 remove to have changeable carrying touchst angiotensin-converting enzymes essential be runneled solely(prenominal) course of study for injury. free grace acquired in a business compoundingIntangible pluss with an equivocal wasting diseaseful lifeIntangibles not and ready for design handout examination of wholly opposite(a) assets is required unaccompanied if thither is an indi buttockst that they might be bilked collectable to events such as the scotch and judicial environment and securities industry respects and so forth2.How is an evil test undertaken? (2 Marks)The test involves comp atomic number 18 the carrying get along of an assets or CGU with its retrievable amount of money. The recoverable amount is the higher(prenominal) of fair re observe less(prenominal) salute to address and it value in routine.3.What is value in office? (1 Mark) take accou nt in use up is the testify value of futurity interchange flows judge to be derived from an asset or a CGU.4.How is value in use for a money generating unit of measurement mensurable? (2 Marks)It is a professional fancy based on past capital inflows and expected proximo cash inflows.5.What is an price blemish? (1 Mark)The blemish of future economic benefit as the amount in the balance airplane for the asset or CGU exceeds it recoverable amount.6.What is a cash-generating unit? (1 Mark)A CGU is the sm completelyest identifiable base of assets that generates cash inflows that atomic number 18 largely nonsymbiotic of the cash inflows of otherwisewise assets or groups of assets. CGU assets norm everyy cigaretnot be tried item-by-itemly.7.How are unified assets well-tried for outrage? (2 Marks)As they do not singly generate cash flows they are portiond to CGU on a commonsensical or pursuant(predicate) basis. The portion of unified assets is thence tested alon g with the assets of the CGU to which it has been exclusivelyotted.8.Supersatumas grows citrus production on a number of plantations in the Perth Hills. This payoff is then affect into fruit succus and other products at their cannery. These products are then exchange to the domain via their chain of Jucy commercialise stores. How some cash generating units would the familiarity have? wherefore? (2 Marks)3 if there is an progressive market for the outfit of severally stage. The stages being the fruit of the orchards, the processed products in their cannery and the juice sold in their stores. This is consecutive even if all or spark of the output produced is employ internally.9.In allocating an disability going for a cash generating unit which of the avocation assets would not be given a portion of the way out land machinery stocktaking manufacturing licence receivables? wherefore? (1 Mark)Inventory and accounts receivable. AASB 136 parity bit 2 states that th is standardised does not gain to them as they are already cover (impaired) by other standards such as allowance for questionable debts.10.In allocating an handicap release for a CGU the carrying amount of anyindividual asset must not be reduced to a lower place what figure? (1 Mark)The highest of it fair-value less cost to sell and its value in use or below zero.11.If a portion of an baulk prejudice for a CGU cannot be allocated to one of the units assets because it will jailbreak AASB 136 carve up cv what happens to that portion? (1 Mark)It is allocated pro-rata to the other assets of that unit (group of units) that can be impaired further.12.Timbert give birth Ltd processes pine trees enceinte on its own plantations in its pure tone mills. The milled woods is then do into outdoor furniture for sale to the public. Is it thinkable for Timbertown Ltd to have more(prenominal) than CGU? (2 Marks)Yes. If there is an active market for the output of each stage. This is a lign even if all or partly of the output produced is utilize internally.13.Gumtree Ltd has located that its snap fastener knock off fraction is a CGU. The carrying amounts of the give the sack assets of the cleavage at 30 June 2013 areFactory (net)$310 000 state200 000Equipment (net)120 000Inventory75 000Receivables32 000Accounts Payable(17 000)Do not impair liabilitiesGumtree Ltd has calculated the value in use of the contribution to be $680 000.mandatory assign if an declension breathing out exists for the picnic ware segmentation. steer all workings. (1 Mark)3 ten thousand + 2000000 + 120000 + 75000 + 32000 = 737000 Carrying amount assets 680 000 rank in use disablement loss = 5700014. tricksyoak Ltd has determined that its glasshouse fragment is a CGU. The carrying amounts of the net assets of the division at 30 June 2013 are down80 000Propagating Sheds48 000 gross sales Office 25 000Equipment (net)56 000Inventory35 000Receivables19 000Accounts Payable(26 000)Mo rtgage Loan(50 000)Silky Oak Ltd has calculated the value in use of the division to be $327 000. postulateDetermine if an impairment loss exists for the glasshouse division. demo all workings. (1 Mark)80, 000 + 48000 + 25000 + 56000 + 35000 + 19000 = 236000 Carrying amount 327000 Value in useNO Impairment loss15.Hovea Ltd has determined that its transport division has suffered an impairment loss of $52 000 for the year stop 30 June 2013. At that assignment the carrying amount of the divisions assets were$Receivables 31 000Inventory 18 000Landcl 000Trucks (net)250 000Servicing building block 50 000Cannot allocate to receivables and inventoryRequired divvy up the loss crosswise the assets of the CGU in harmony with AASB 136, paragraph 104. Show all workings. (3 Marks) You can reduce to 150 450CA apportionment genuine CA Land 150000 (150000 450000) 17333 132667 Truck 250000 (250000 450000) 28889 221111 serve well Unit 50000 (50000 450000) 5778 44222 450000 dishonour to n earest long horse from 0.5016.Tuart Ltd has determined that its sell division has suffered an impairment loss of $37 000 for the year end 30 June 2013. At that date the carrying amount of the divisions assets were$Inventory 92 000Shop Fittings (net) 40 000Land100 000Buildings180 000Additionally, the company has unified assets worth $150 000, one thirdly of which have been allocated to the sell division.Requireddeal the loss across the assets of the CGU in unanimity with AASB 136, paragraph 104. Show all workings (3 Marks)CA Allocation New CA Shop fittings 40000 (40000 370000) 4000 36000 Land100000 (100000 370000) 10000 90000 Building 180000 (180000 370000) 18000 162000 corporeal O/H 50000 (50000 370000) 37000017.Peppermint Ltd has determined that its orchard division has suffered an impairment loss of $42 000 for the year ended 30 June 2013. At that date the carrying amount of the divisions assets were$Inventory 21 000Land200 000Fruit Trees114 000Reticulation Systems 36 000 blessing 60 000RequiredAllocate the loss across the assets of the CGU in accordance with AASB 136, paragraph 104 and unionize the journal institution to record the loss. Show all workings. (2 Marks)Goodwill 60000 42000 = 18000 remaining grace201330 June Impairment loss 42000 salt away impairment losses goodwill 4200018.Can an impairment loss, once recorded, be reverse? (2 Marks)Yes an impairment loss recognized in former period that no longer exists can be reversed in the current year. However an impairment of goodwill cannot be reversed.