Reference no: EM132774226

Ayamee Bhd has two divisions, Tango and Rumba, each of which is a separate cash-generating unit (CGU).

Additional information as at 31 December 2017:

Tango's land had a fair value less costs to sell of RM302,000.

Rumba's land had a fair value less costs to sell of RM110,000.

Receivables were considered to be collectable.

Inventories were measured at lower of cost and net realizable value.

Ayamee Bhd's management conducted an impairment testing at 31 December 2017 and determined the recoverable amount of each CGU to be RM811,000 for Tango and RM520,000 for Rumba.

Required:

For the financial year ended 31 December 2017:

Problem i. State the main accounting standard applicable to the above situation.

Problem ii. Analyse whether the CGU's are impaired. Explain your answer.

Problem iii. Calculate impairment loss for each CGU (if any).

Problem iv. Allocate the impairment loss.