Reference no: EM132546012

GP Industries (GPI) is a manufacturing company with operations in Ontario and British Columbia.

GPI in Ontario:

Among the assets, BPI owns and operates a large commercial building in Toronto. The building, on its own, is rented out to other entities and therefore represents its own stand-alone cash generating unit. Information on the Building at year end, March 31, 2020, is as follows:

Building Balance March 31, 2020

Cost $1,750,000

Accumulated Depreciation (650,000)

Fair Market Value 850,000

Selling costs 50,000

Discounted future cash flows 1,150,000

GPI in British Columbia:

In 2018, GPI acquired a smaller competing company in British Columbia and goodwill was allocated to the CGU as shown below. During 2018 and 2019, impairment testing was done on the subsidiary, and it was found that the value in use of the CGU exceeded the carrying amount, so no impairment was recorded.

However, at March 31, 2020, the COVID crisis had crippled the exports of the British Columbia subsidiary, and there was not much hope that it would recover. The information below represents the latest estimates of FV of assets as well as the discounted future cash flows of the subsidiary.

B.C. Subsiduary      Book Value 3/31/20                    Fair Value 3/31/20

Cash                            50,000                                    50,000

Property, Plant & Equip.   1,100,000                           1,000,000

Land                              150,000                               150,000

Goodwill                          300,000                              ???

Discounted Future Cash Flows for the CGU in B.C. is $1,050,000

Required -

Question 1: Calculate if any impairment must be recorded for the building in Ontario or the CGU in British Columbia. If impairment is present, determine the amount and how it would be recorded, i.e. which assets would be affected and by how much.