3. (a) IAS 36 Impairment of Assets provides accounting guidance for the impairment of non-currentassets.Requirement:Explain what a cash-generating unit (CGU) is and how an impairment loss in a CGU should beaccounted for in accordance with IAS 36.<(b) The carrying amounts of the assets of a cash-generating unit (CGU) are as follows:2GoodwillPatents and copyrightsProperty, plant and equipmentJ£00050,00050,000150,000250,000E22JThere is evidence to indicate that the CGU is impaired. The recoverable amount of the CGU is £180,000.The fair value less costs disposal for the patents and copyrights is estimated at £35,000 and the fairvalue less costs of disposal for the property, plant and equipment is estimated at £140,000. <Requirement:<Calculate the amount of the impairment loss and explain how this should be allocated between theassets of the CGU.<(c) Explain how IFRS 13 Fair Value Measurement establishes a fair value hierarchy to categoriseinputs used to measure fair value.

Impairment loss refers to a decrease in the carrying value of an asset or cash-generating unit (CGU)…

Answered: 3. (a) IAS 36 Impairment of Assets…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Consolidated Balance Sheet Working Paper, Identifiable Intangibles International Auto (IA) acquires all of the stock of Genuine Parts (GP) and reports the acquisition as a stock investment on its own books. The acquisition involves the following payments. All amounts are in thousands. Cash paid to GP shareholders $10,000 2,400 Cash paid to consultants and lawyers Fair value of new IA stock issued, 1,000 shares, $4 par 72,000 1,800 500 Stock registration fees, paid in cash Fair value of earnings contingency The earnings contingency, if paid, will occur three years subsequent to the acquisition. The balance sheet accounts of GP and IA, just prior to the acquisition, are as follows: International Auto (in thousands) Current assets Fixed assets, net Trademarks Current liabilities Long-term liabilities Common stock, par value Additional paid-in capital Retained earnings Accumulated other comprehensive income Treasury stock Total Book Value Dr (Cr) $60,000 840,000 178,000 (50,000) (700,000)…
AASB 116 requires disclosure of the following by asset class: I II III IV The useful lives of assets Yes No Yes Yes Accumulated impairment losses No Yes Yes Yes Items pledged as security Yes Yes No Yes Additions during the year Yes Yes Yes No ΟΙ O IV. O III Oll
Identifiable intangible assets include all of the following, except * Computer software Copyright Leasehold improvement Patent An intangible asset is identifiable when * O It arises from contractual and other legal right. It is either separable or it arises from contractual and other legal right. It is separable It is neither separable nor it arises from contractual and other legal right. Which is a characteristic of an intangible asset? * Claim for a specific amount of cash Physical existence Long-lived O Held for sale After initial recognition, an intangible asset shall be measured using * Cost model or revaluation model Cost model Revaluation model Cost model or fair value model O O O O O O O
Intangible assets on the balance sheet are subject to: Depreciation Amortization O None of the Above
Explain the accounting treatment in the event that an impairment review of a non-current asset which has been previously revalued with a revaluation surplus revealed that the non-current asset has suffered an impairment loss.
The main objective of IAS 36 Impairment of Assets is to prescribe the procedures that should ensure that an entity's assets are included in its statement of financial position at no more than their recoverable amounts. Where an asset is carried at an amount in excess of its recoverable amount, it is said to be impaired and IAS 36 requires an impairment loss to be recognized. Required: Define an impairment loss explaining the relevance of fair value less costs to sell and value in use and state how frequently assets should be tested for impairment. 2. Describe the possible incators of impairment. 3. Explain how an impairment loss is accounted for after it has been calculated.
II. When the cárrying amount or the expected ultimate cost of the qualifying asset exceeds its recoverable amount or net realizable period shall not exceed the amount of borrowing costs it incurred I. The amount of borrowing costs that an entity capitalizes during a Which of the following statements is correct? in that period. value, the carrying amount is written down or written off i accordance with the requirements of other Standards. a. Ionly C. Both I and II b. II only d. Neither I nor II
Q5 Under CCA method, depreciation is provided on the _____ of the asset: a. Historical cost b. Past cost c. Current cost d. Original cost
Statement 1: Entities with qualifying assets shall disclosed in the financial statements the amount of borrowing costs capitalized as well as the amount of borrowing costs charged to profit or loss for the period.Statement 2: Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Only statement 1 is correct. Both statements are correct Both statements are incorrect. Only statement 2 is correct
PFRS 5 covers: 1. The classification, measurement and presentation ofassets ‘held for sale’ 2. The classification and presentation of discontinuedoperations 3. The impairment of long-lived assets to be held and used A. 1 and 3 onlyB. 2 and 3 onlyC. 1, 2 and 3 allD. 1 and 2 only
Pre-Lecture Question 01 Which of the following is a characteristic of intangible assets? 1 They are all subject to amortization. 2 They are long-term in nature. 3 They are financial instruments. 4 They have physical existence.

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