CLASS EXERCISE 3

The information below relate to company XYZ’s CGU:

It includes a vehicle with a recoverable amount of R2,800, but the recoverable amounts of the
other assets in the CGU are unknown. The CGU has a recoverable amount of R8,000 and a
carrying amount of R12,000, constituted by the following individual carrying amounts:

R
Inventor
y 1000
Vehicles 4000
Building
s 5000
Goodwil
l 2000

Required:
Calculate and allocate the impairment loss to this CGU.

CA RA Impairment
W1 R R R
Vehicle 4000 2800 1200

W2
CA of CGU after Vehicle impairment (12000-1200) 10800
RA of CGU
(given) -8000
Impairment loss of CGU 2800

CA b4 CA
W3 IL IL allocation after
First round of allocation
CGU - Allocation 2800
Goodwil
l 2000 -2000 0

CGU impairment still to be allocated 800

Goodwil
l 0 0 0
Inventor
y 1000 0 1000
Vehicle 2800 0 2800
Building 5000 -800 4200
s
8800 0 8000