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Impairment
Impairment
Recoverable amount = higher of fair value less cost of sell OR value in use
Recoverable amount = $6,500,000 OR $ 6,600,000 =$6,600,000
Allocated assets:
W2
Plant = (325-75)/500 * $125,000=$62,500
Intangible assets =(150-50)/500*$125,000=$25,000
Land =150/500*$125,000=$37,500
1. Carrying amount =$1,299,000
Recoverable amount =$1,215,000 OR $1,100,000 =$1,215,000
Impairment loss =$1,299,000-$1,215,000= $84,000
W1
Information Technology network =($116,000/$1,134,500)*$52,000=$5,317
Land = ($290,000/$1,134,500)*$52,000=$13,292
Plant =($576,000/$1,134,500)*$52,000=$26,401
Patent =($152,500/$1,134,500)*$52,000=$6,990
Required: What is the amount of impairment and how should this be treated in the
financial statements?
Journal entry: