Question

The following information relates to three assets held by Entity A at the year-end of 2019:...

The following information relates to three assets held by Entity A at the year-end of 2019:

Machine Plant Motor van
Carrying amount 1000 500 400
Value in Use 800 600 350
Fair Value less Costs of Disposal 900 650 300

These assets are used by Entity A for generating economic benefits in its business operation.

REQUIRED:

According to relevant accounting standards, measure:

  • the impairment loss which was charged in the Statement of Profit or Loss for the period ended 31 December 2019; and
  • the carrying amount of the PPE which was recognised in the Statement of Financial Position as at 31 December 2019.

ANSWERS:

Statement of Profit or Loss for the period ended 31 December 2019

The impairment loss is $Blank 1.

Statement of Financial Position as at 31 December 2019

The carrying amount is $Blank 2.

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Homework Answers

Answer #1

CALCULATION OF CARRYING AMOUNT

ASSET CARRYING AMOUNT $ (A) VALUE IN USE $ (B) FAIR VALUE LESS COST OF DISPOSAL $ (C) RECOVERABLE AMOUNT (HIGHER OF B AND C) $ (D) IMPAIRMENT LOSS (A - D) $
MACHINE 1000 800 900 900 100
PLANT 500 600 650 650 (150)
MOTOR VAN 400 350 300 350 50

TOTAL IMPAIRMENT LOSS = $100 + $50 = $150

VALUE OF PPE AS ON DEC 31 2019

MACHINE = $1000 - $100 = $900

PLANT = $500

MOTOR VAN = $400 - $50 = $350

TOTAL PPE = $900 + $500 + $350 = $1750

Statement of Profit or Loss for the period ended 31 December 2019

The impairment loss is $150.

Statement of Financial Position as at 31 December 2019

The carrying amount is $1750.

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