Reference no: EM132716933
Question - Last Ltd has two divisions, Time and Leisure. Each of these is regarded as a separate CGU.
At 31 December 2019, the carrying amounts of the assets of the two divisions were:
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Time
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Leisure
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Plant
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$1,440?
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?$1,140?
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Accumulated depreciation
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??(620?)?
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(360)
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Patent
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240???
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Inventories?
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46??
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70
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Receivables
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76??
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80
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Goodwill
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?? 20??
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24
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The receivables were regarded as collectable, and the inventories' fair value less costs of disposal was equal to its carrying amount. The patent had a fair value less costs of disposal of $205. The plant at Time was depreciated at $280 p.a., and that at Leisure was depreciated at $210 p.a.
Last Ltd undertook impairment testing at 31 December 2019, and determined the recoverable amounts of the two divisions to be:
Time ??$1,002
Leisure 938
As a result, management increased the depreciation of the Time plant from $280 to $310 p.a. for the year 2020.
By 31 December 2020, the performance in both divisions had improved, and the carrying amounts of the assets of both divisions and their recoverable amounts were as follows:
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Time?
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Leisure
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Carrying amount
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?? $1,280?
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$1,385
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Recoverable amount
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? 1,420?
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1,472
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Required -? Calculate the impairment loss for Last Ltd for the year ended 31 December 2019.
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