Acw2491 Tutorial Solution

ACW2491 Company Reporting

Tutorial Solution

Semester 1 2016

Topic 6: Impairment of Assets

CHAPTER 13

REVIEW QUESTIONS

1.

It is a test to determine if an entity’s assets are overstated, that is, whether the carrying amount of the assets

is greater than their recoverable amount.

4.

AASB 136 para 12:

(a) significant decline in market value

(b) significant changes in the technological, market, economic or legal environment in which the entity

operates

(c) increases in market interest rates

(d) the carrying amount of the entity’s assets exceeds the entity’s market capitalisation

5.

AASB 136 para 12:

(a) evidence of obsolescence or physical damage

(b) assets becoming idle, plans to discontinue operations, plans to dispose of assets

(c) economic performance is worse than expected

7.

AASB 136 para 60

Under cost model:

- Recognise loss immediately in profit or loss

- Write down asset – if depreciable, increase accumulated depreciation and impairment losses account

Under revaluation model: as for a revaluation decrease under that model, the effect being dependent on

whether there have been past revaluation increments.

10.

AASB 136 para 104:

- Reduce the carrying amount of any goodwill allocated to the CGU

- Allocate any balance of loss to the other assets of the CGU pro rata on the basis of their carrying

amounts

PQ13.1

At 30 June 2015 Carrying amount = $200 000 (show the workings)

Recoverable amount is fair value less costs of disposal = $152 000 (show the workings)

Value in use is calculated at the present value of future cash flows = $195 200 (show the workings)

The appropriate journal entry is as follows:

Impairment loss - machine

Accumulated depreciation and impairment

losses – machine

(Impairment loss on machine)

Dr

Cr

1

4 800

4 800

ACW2491 Company Reporting

Tutorial Solution

Semester 1 2016

Topic 6: Impairment of Assets

PQ 13.4

The journal entry to record the impairment loss is: (show the...