Reference no: EM132607036

Ludd Ltd. (LL), a publicly accountable entity, has a cash-generating unit (CGU). LL is required to perform an impairment test on the CGU. LL provided the following information relating to its CGU:

                                       Carrying value                Fair value less costs of disposal

Equipment                         $ 800,000                     $ 300,000

Building                             1,200,000                      1,100,000

Land                                   500,000                        650,000

Goodwill                               600,000                            N/A

Total                                  $3,100,000                 $2,050,000

The CGU is expected to generate cash flows of $250,000 per year for the next 10 years, after which the residual value is expected to be the value of the land only, at a fair value less costs to sell of $800,000. LL has a discount rate of 7%.

Required:

Question 1: Allocate the impairment loss to the assets of LL's CGU?